Qatar confirms Red Sea tension disrupting LNG shipments

Qatar's state-owned QatarEnergy officially acknowledged today the conflict in the Red Sea is impacting the delivery of some of its LNG shipments and forcing longer travel times.

"While the ongoing developments in the Red Sea area may impact the scheduling of some deliveries as they take alternative routes, LNG shipments from Qatar are being managed with our valued buyers," the company said in a statement.

"QatarEnergy confirms that Qatar's LNG production continues uninterrupted, and our commitment to ensuring the reliable supply of LNG to our customers remains unwavering," the company added.

Qatar in mid-January diverted at least six vessels — three laden and three empty — away from the Suez Canal to the Cape of Good Hope in southern Africa, mirroring other shippers after the UK and US carried out air and missile strikes against Houthi militant targets in Yemen on 12 January. Deliveries to Europe from Qatar had largely used the Suez Canal in the preceding weeks despite attacks on ships in the Bab el-Mandeb strait, which links the Red Sea with the Gulf of Aden.

The three laden carriers — the 210,200m³ Al Nuaman, 214,176m³ Al Huwaila and 210,200m³ Al Ghariya — had held offshore the southern coast of Oman on 15 January, declaring for arrival at the Suez Canal. The three vessels were then diverted away from the shipping passage later that day, travelling south for the Cape of Good Hope, with no further carriers heading for Suez.

A further four carriers laden with LNG cargoes loaded at Qatar's Ras Laffan liquefaction terminal were today heading for the Cape of Good Hope on their way to the Atlantic, avoiding the typical route via the Suez Canal.

Deliveries from Qatar to Europe via the Suez have recently taken around 2-3 weeks, Vortexa data show, with some variation depending location of discharge terminal and unloading slot timings. In contrast, the 145,000m³ Methane Jane Elizabeth — the only carrier to recently complete a Qatari delivery to Europe via the Cape of Good Hope — took slightly more than three weeks to reach European waters, and almost four weeks before it reached northwest Europe. Declared arrival dates for recent Qatari loadings on their way to Europe via the Cape are broadly in line with this timeline.

The diversions suggest Qatari deliveries to Europe in the short-term are set to fall. A total of 701,000t has been delivered so far this month, according to Vortexa data. But no other Qatari carriers are set to reach Europe this month, judging by the declared arrival dates for carriers presently on their way to the region from Qatar, suggesting Europe's January take of Qatari LNG is not set to grow further. This would be a sharp fall from the 1.21mn t received last month and 1.34mn t taken in January 2023.

February deliveries could also be delayed — Europe received 1.15mn t from Qatar in February 2023. There are presently seven LNG carriers which could discharge Qatari cargoes to Europe in February this year, totalling 598,000t. But the longer journey time via the Cape of Good Hope suggests any loadings at Ras Laffan in the coming few days would be unlikely to reach Europe before late February, suggesting little scope for the substantial ramp-up in Qatari flows to the region needed to avoid a drop in February receipts on the year.

Qatar supplies LNG to Europe under long-term sales agreements — such as those held with Italy's Edison and Poland's Orlen — and imports LNG under its own regasification capacity in the UK.

LNG shipments are being affected by attacks on shipping in the Red Sea, Qatar's prime minister Sheikh Mohammed bin Abdulrahman al-Thani said on 16 January at the World Economic Forum in Davos, Switzerland. Military intervention would create a further escalation rather than resolve the issue, he added.

By Bachar Halabi and Samuel Good