Qatar Has Eyes on More Long-Term Deals as It Bets Big on LNG
(Bloomberg) — Qatar is seeking more gas deals in Europe and Asia in a bet demand will continue to grow as it embarks on a new multibillion-dollar project to expand...
By Maha El Dahan and Andrew Mills
DOHA, Feb 22 (Reuters) – Neither Qatar nor any other single country has the capacity to replace Russian gas supplies to Europe with liquefied natural gas (LNG) in the event of disruption due to a conflict between Russia and Ukraine, Qatar’s energy minister said on Tuesday.
Tensions between Russia and Ukraine escalated on Tuesday after Moscow ordered troops into two breakaway regions in eastern Ukraine.
The United States and its European allies are set to announce fresh sanctions against Russia after President Vladimir Putin formally recognised the independence of the two regions in eastern Ukraine. The sanctions could affect the Russian flow of gas into Europe.
“Russia (provides) I think 30-40% of the supply to Europe. There is no single country that can replace that kind of volume, there isn’t the capacity to do that from LNG,” minister Saad al-Kaabi told reporters at a gas conference in Doha.
“Most of the LNG are tied to long-term contracts and destinations that are very clear. So, to replace that sum of volume that quickly is almost impossible,” he said.
Qatar, one of the world’s top LNG producers, has recently been approached by the United States to reroute gas supplies to Europe in case Russia attacks Ukraine and the United States imposes sanctions on Moscow.
It has most of its volumes locked up under long-term contracts mostly to Asian buyers but also sends cargoes to Europe.
Kaabi said that for Qatar the amount of divertable contracts that can be shipped to Europe is only 10-15%.
“It’s not that something is not contracted, the question is, is it divertible or not? And the majority is tied up to long term contracts. The divertible volume is probably 10-15%,” he said.
Europe’s liquefied natural gas (LNG) terminals have limited available capacity to absorb extra supply from the United States or other major producers in the event gas from Russia is disrupted if it invades Ukraine.
(Reporting by Maha El Dahan and Andrew Mills in Doha, writing by Marwa Rashad in London, Editing by Nina Chestney and Chizu Nomiyama)(c) Copyright Thomson Reuters 2022.
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