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UK asks Qatar to become gas ‘supplier of last resort’

The British authorities has approached Qatar concerning the Gulf state propping up its gasoline provides as a shortage in Europe pushes costs to document ranges and raises fears of a winter gasoline disaster.

UK ministers and their counterparts from the world’s largest exporter of liquefied pure gasoline have held talks over a long-term association the place Qatar would turn into a “provider of final resort”, in line with folks briefed on the discussions. This is able to guarantee a secure supply of LNG from Qatar even when international provides are tight.

Qatar has additionally rerouted 4 giant tankers to the UK over the previous two weeks. An individual conversant in the talks mentioned the shipments got here after Boris Johnson, UK prime minister, requested Sheikh Tamim bin Hamad al-Thani, the Qatari emir, at a latest assembly for assist.

Downing Avenue insisted that the UK had not “requested or secured any extra shipments from the Qatari authorities” and that power provide remained secure all through the winter. Doha declined to remark.

The 2 leaders met on the UN Normal Meeting in September and agreed to “deepen” the connection between two nations which have already got robust enterprise, diplomatic and army ties. The pair met once more on the sidelines of the COP26 summit in Glasgow this week. Johnson additionally spoke to Saad al-Kaabi, Qatar’s energy minister, on the margins of a UK international funding summit final month.

Map showing locations of four Qatari tankers bringing LNG to UK on Friday October 29 2021

A worldwide gasoline provide scarcity has brought about a surge in costs in latest months, leaving energy intensive industries and suppliers within the UK struggling and lots of customers dealing with a pointy rise in family payments.

Folks briefed on the discussions confirmed that London is pursuing a possible long-term deal given considerations over elevated competitors for LNG provides with Asia.

One UK authorities insider mentioned: “The Qataris have indicated a willingness to agree longer-term provide offers to ship . . . gasoline to the UK in an emergency situation — a form of ‘provider of final resort’ association.” 

One other individual briefed on the discussions mentioned: “The UK realises it wants a long-term deal to have a secure power provide to the purpose they turn into carbon impartial, but it surely’s not but clear how this might be achieved.”

The latest gasoline scarcity has been brought on by a surge in demand as economies rebound from the pandemic, and Russia restricted gasoline exports to western Europe.

Liz Truss, UK international secretary, held talks with Qatari leaders in Doha this month on bettering UK power safety, as a part of a “strategic dialogue” to be launched in early 2022 additionally protecting commerce and defence. Kwasi Kwarteng, enterprise secretary, has additionally been concerned in talks.

A authorities spokesman mentioned the UK held “common discussions” with its “key power companions all over the world forward of winter”.

Gasoline accounts for about 40 per cent of UK electrical energy era and heats the vast majority of houses. It’s anticipated to stay a key fuel although the nation is pursuing a internet zero goal by 2050.

Boris Johnson, UK prime minister, meets Sheikh Tamim bin Hamad al-Thani, the Qatari emir, at COP26 in Glasgow this week © Christopher Furlong/AP

As output from the North Sea has declined, the UK has pursued a market-based import technique — now liable for assembly half of all demand — hinging on the provision of LNG cargoes to complement pipelines from Norway and the EU.

The federal government has been warned that leaving the UK reliant on the LNG marketplace for as a lot as a fifth of its gasoline provide might go away consumers struggling to safe sufficient throughout a provide crunch.

Not like lots of its friends, the UK has minimal storage capability, with the equal of just a few days of peak winter gasoline demand in reserve.

The variety of LNG tankers coming to the UK this 12 months has fallen. Most shipments are going to Asia, together with these from Qatar, which primarily has long-term mounted contracts with nations within the area. The Gulf state, which has vital investments within the UK, has this 12 months fallen off the UK authorities’s listing of fundamental gasoline suppliers.

The dispatch of 4 cargoes from Qatar to the UK prior to now two weeks stand out. One individual briefed on the talks mentioned that after a request by Johnson, Qatar was “capable of reroute some LNG that was beforehand unallocated to the UK”.

Whereas UK costs are at near-record ranges they’re marginally decrease than in Asia. The UK authorities has not paid for the shipments. As a substitute, Qatar will promote the gasoline into the UK market as regular.

The individual added that Qatar had not met comparable requests from the EU due to a European Fee investigation in 2018 into state firm QatarEnergy’s long-term contracts, which Doha has described as baseless.

Within the UK, Qatar is almost all proprietor of South Hook LNG terminal in Wales. The primary of 4 tankers, the Al Aamriya, arrived at South Hook on October 29. A second, Mozah, arrived on Wednesday with the Al Bahiya and Al Samriya arriving within the coming days.

Collectively, they maintain virtually a 3rd of the UK’s common month-to-month gasoline imports. Satellite tv for pc monitoring reveals that three of the vessels’ locations modified to the UK in late October.

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