Qatar faces higher gas shipment costs after UAE imposes port ban
Qatar is facing higher costs in selling its energy supplies to customers in Asia and Europe as attempts by Arab states to isolate the government in Doha are complicating shipments for the world’s biggest exporter of liquefied natural gas. While the Gulf state’s exports of crude oil, condensate and LNG are continuing, oil brokers and traders say it has had to scramble to find new ports to refuel its vessels after the UAE banned Qatari-linked vessels from its waters. Fujairah, one of the smallest of the emirates, is home to the biggest shipping fuel hub in the Middle East and is normally a key stopping point for Qatari LNG and oil tankers as they sail out of the Persian Gulf.
That has forced Qatar, an Opec member, to book new refuelling stops in Gibraltar, Singapore and other shipping fuel hubs, according to brokers, likely incurring higher costs and potentially slowing deliveries. Disruptions have been limited so far, however, with Saudi Arabia, UAE, Egypt and Bahrain seen as unlikely to escalate the crisis further by trying directly to disrupt the energy shipments that have made Qatar the wealthiest per capita country on the planet. “We do not believe that the rift will immediately imperil regional energy security,” said Helima Croft, global head of commodity strategy at RBC Capital Markets. “Egypt is unlikely to close the Suez Canal to Qatari tankers, and at this point, efforts to disrupt Qatari shipments will likely have a marginal effect, absent further deterioration.”
The oil price has been largely unfazed by the tensions in the Gulf, with Brent crude oil, the international benchmark, languishing below £50 a barrel. It is on course for its sixth straight session of falls. Some oil traders have attributed the pressure on the oil price on Tuesday to fears Qatar could retaliate by trying to scupper a deal between Opec and countries to try prop up the price by restricting output.
But most analysts expect Qatar would view this as an act of self-harm. While it is only the 10th biggest producer in Opec, its huge shipments of LNG, which set it apart from other Gulf energy producers, are largely linked to the oil price. Kuwait, which is attempting to mediate between Qatar and its Arab rivals, said on Tuesday that Qatar remains committed to the Opec and non-Opec supply cut of a collective 1.8m b/d.
That deal, which Qatar was instrumental in organising late last year, was extended for nine months less than two weeks ago. “We do not see too much cause for concern at this point regarding potential risk to the Opec-led supply accord currently in effect,” said analysts at JBC Energy in Vienna. Nevertheless, tensions in the Gulf are causing minor disruptions to the usual order of energy trade in the region.
S&P Global Platts, the oil price agency that assess benchmark prices for physical oil trades, has said crude from Qatar will be largely excluded from its Middle East trading window because of the complications caused by shipping restrictions for the Gulf state.
But its neighbours should beware the dangers of making it a pariah Tuesday, 6 June, 2017
The supertankers known as Very Large Crude Carriers, which can carry more than 2m barrels, often load a mixture of Qatari crude with oil from other countries. “It is typical in the Gulf to co-load VLCCs in combinations that include crude oil from Kuwait, Saudi Arabia, Qatar, UAE and Oman,” Platts said in a note to subscribers.
“As such, restrictions on vessels calling into Qatar and associated uncertainty could impact the inherent value of crude loading from Qatar.”