Can Qatari gas compensate for disruptions in Russian supplies to Europe?

Content of the article

LONDON — The United States, the world’s largest producer of natural gas, has asked Qatar and other major energy producers to divert gas supplies to Europe if Russia attacks Ukraine and states United impose sanctions on Russia.

Russia, which supplies about a third of Europe’s gas, has amassed some 120,000 troops near its neighbor but denies plans to invade Ukraine.

Any interruption in supply due to an attack would aggravate the existing energy crisis caused by a global shortage of oil and gas.


Content of the article


Europe’s natural gas supplies from Russia are mainly delivered by pipeline and since October last year have been well below seasonal levels.

Flows in 2021 through the three main Russian gas pipelines to Europe totaled 37,409 gigawatt hours/day (GWh/d), according to data from Refinitiv Eikon, compared to 41,263 GWh/d in 2020 and 49,431 GWh/d in 2019 .

European storage stocks are around 19 billion cubic meters (BCM) lower than their five-year seasonal average, according to Platts’ analyses, although other sources of supply have been nearly maxed out in recent months. .

Platts Analytics expects that even if Russian flows continue, European equities will hit record lows at the end of winter, leaving little room to absorb another supply shock.


Content of the article

European imports of liquefied natural gas (LNG) reached a record high in January at 11.8 billion m3, compared to a previous record in November 2019 of around 9 billion m3. Nearly 45% of LNG imports came from the United States.


Qatar, one of the main producers of LNG, has little available supply because most of its production is tied to long-term contracts.

Qatar’s LNG export capacity is 106 billion m3. S&P Global Platts’ Luke Cottell expects the figure to reach just 107 billion cubic meters, capping Qatari exports.

It could produce more by postponing second-quarter maintenance, but its Asian contracts still limit its ability to supply Europe.

Traders estimate that Qatar’s production breaks down into 90% to 95% long-term contracts and 5% to 10% spot contracts.


Content of the article

Long-term point-to-point contracts, such as those from Qatar to China or Japan, could be modified to free up Europe, but any Asian customer who accepts would want compensation.

Sources and industry analysts expect Qatar to divert only 8-10% of its LNG to Europe, and even that will take time as it takes longer to ship LNG from Qatar. to Europe than to Asia.

Qatar plans to increase its LNG production by 40% with its North Field expansion project, but it will not produce until 2026.


Qatar is asking the European Union to restrict gas resales outside the continent to prevent traders from reselling for a profit, if it wants Qatar and other major gas suppliers to provide emergency supplies.


Content of the article

The EU sees free gas trading as key to energy security, but major gas producers and some gas consumers say reforms over the past two decades have led to complexity and higher prices.

Some traders also redirect Qatari gas to Asia for profit.

“Since the price hike in Europe, Italy appears to have diverted several Qatari cargoes to higher priced markets, with fourth quarter imports from Qatar down seven cargoes from 2020,” Felix said. Booth, head of LNG at energy intelligence firm Vortexa.

Industry sources said Doha would not be able to control the final destination in exchange for excess supply because once the gas reaches Europe, any previous restrictions on its destination are not enforceable. and owners can reload it on new LNG carriers.


Content of the article

Morten Frisch, senior partner at Morten Frisch Consulting, said regulations in Britain and most EU countries do not prohibit the reloading of LNG cargoes to countries outside Europe.

The European Commission said on Monday it would not comment on details of discussions with international partners on gas supply.


Steady LNG flows to Europe have already boosted 30-day average regasification capacity utilization – which converts super-chilled LNG back into natural gas – to 75% from 51% in early January in Western and Southern Europe, said Rystad Energy.

This means that Europe has limited regasification and storage capacity to absorb other LNG flows.

(Reporting by Marwa Rashad and Dmitry Zhdannikov in London; Additional reporting by Andrew Mills in Qatar and Chen Aizhu in Singapore; Editing by Nina Chestney, Pratima Desai and Barbara Lewis)



Postmedia is committed to maintaining a lively yet civil discussion forum and encourages all readers to share their views on our articles. Comments can take up to an hour to be moderated before appearing on the site. We ask that you keep your comments relevant and respectful. We have enabled email notifications. You will now receive an email if you receive a reply to your comment, if there is an update to a comment thread you follow, or if a user follows you comments. Visit our Community Rules for more information and details on how to adjust your E-mail settings.

Mary I. Bruner