Saudi-led Isolation Doesn’t Stop Qatar Gas Or Oil Exports

Doha/Tokyo: Qatar, the world’s biggest seller of liquefied natural gas, can still access shipping routes to deliver oil and gas to buyers after Saudi Arabia and other neighbouring states barred the emirate from exporting through their territorial waters.

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State producer Qatargas told Japan’s Jera Co. that it will keep supplying LNG as normal regardless of the Saudi-led severing of diplomatic ties with Qatar, Jera spokesman Atsuo Sawaki said by phone. Jera is Japan’s biggest buyer of Qatari LNG under long-term contracts, in keeping with data compiled by Bloomberg.

The escalation of tensions in the energy-rich Persian Gulf probably won’t disrupt LNG supplies to Qatar’s main customers in Asia, according to Robin Mills, head of Dubai-based consultant Qamar Energy. “In principle Qatar should still be capable to export via its own waters, Iran and Oman,Mills said.

Saudi Arabia and three allied Arab countries cut ties with Qatar on Monday, escalating a crisis that started over the emirate’s relationship with Iran, a Saudi rival in the region. The governments of Saudi Arabia, Bahrain, the United Arab Emirates and Egypt said in statements they’ll suspend air and sea travel to and from Qatar.

Qatar exported 79.62 million tons of LNG last year, or 30% of global supply, based on the International Group of Liquefied Natural Gas Importers, known by its French acronym GIINGL. State-run Qatar Petroleum, the world’s fourth-largest oil and natural gas producer, has only five Middle Eastern customers for its gas Kuwait, Oman, Jordan, the UAE and Egypt. LNG exports to those countries comprised about 10% of Qatar’s total shipments in 2016, GIINGL data show.

“I presume LNG exports to the UAE will stop,Qamar Energy’s Mills said. “The UAE can have to use other suppliers, but there are plenty of cargoes around in the intervening time./p>

Qatar, like Saudi Arabia and the UAE, is also a member of the Organization of Petroleum Exporting Countries (OPEC). The emirate is the group’s third-smallest producer, pumping 620,000 barrels a day of crude oil in May, data compiled by Bloomberg show, and ships most of its crude and condensate to Asia.

Apart from sending LNG and oil by ship, Qatar exports natural gas through a pipeline operated by Dolphin Energy, which is owned by Abu Dhabi’s Mubadala Development Co., Total SA and Occidental air separation oxygen Petroleum Corp. The pipeline supplies the UAE and Oman and can send 3.2 billion cubic feet per day of gas, though it only uses about two-thirds of that capacity.

A possible shutdown of the pipeline would cause a “severe problemwithin the UAE as demand for electricity peaks within the summer, Mills said. But he played down the likelihood that either country would halt supplies as a result of hardship this may cause the UAE and the damage it might inflict on Qatar’s reputation as a reliable energy provider.

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