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LNG traders are bracing for potential trade disruptions following moves from Saudi Arabia. Bahrain. Egypt and the UAE to cut diplomatic ties with Qatar. the world`s largest LNG supplier.
Saudi Arabia`s decision Monday to break diplomatic ties. consular relations as well as land. air and sea contacts with Qatar over terrorism and extremism funding claims were followed by similar moves from Bahrain. the UAE and Egypt. according to media reports.
Qatar is the world`s largest LNG supplier. having exported 78.8 million mt of LNG in 2016. more than 30% of a total global supply of 257.8 million mt. according to S&.P Global Platts Analytics. and an increasing share of its production is being delivered to emerging Middle Eastern buyers. including Egypt. Jordan and the UAE.
Any disruptions in Qatari LNG supply could have a significant impact on pricing. regional trade flows and energy security in Egypt. which imports most of its LNG from Qatar. a Singapore-based trader said.
More than 60% of Egypt`s LNG imports in 2016 — 4.61 million mt of a total 7.26 million mt — were sourced from Qatar and delivered as part of supply contracts between Egyptian Natural Gas Holding. or Egas. and traders or portfolio sellers.
`There would be some impact.` the trader said. `Cargoes would have to come from somewhere. including the Atlantic or Australia.`
`We might see some increase in prices for Egypt deliveries. whereas Qatar might have some additional volumes that can be shown into other Middle East countries and the Far East. but that would upset some shipping arrangements in the near future.` the trader added.
Egypt is expecting its next Qatari LNG delivery to arrive by June 10 aboard the LNG carrier Golar Glacier. and another June 11 aboard the LNG Golar Celsius. according to S&.P Global Platts trade flow software cFlow.
`We are still digesting and assessing [any potential impact on LNG].` another Singapore-based trader said. adding that rising tensions could impact gas flows through the Dolphin Gas Project. the only pipeline transporting natural gas across borders between Arabian Peninsula countries.
`The UAE might not be affected as much by LNG imports as by pipeline arrangements through Dolphin.` the trader added.
Dubai received 1.25 million mt of LNG from Qatar in 2016. 40% of its total import volume of 3.12 million mt.
Other regional importers of Qatari LNG in 2016 included Kuwait with 1.78 million mt. Pakistan with 2.51 million mt and Jordan with 0.62 million mt.
Bahrain is not an importer of LNG but it is planning to begin LNG imports from August 2018. while there have even been reports that Saudi Arabia could consider importing LNG in the future.
