BY ROBERT TUTTLE and ANNA SHIRYAEVSKAYA
NEW YORK -- Qatar is poised to boost contracted liquefied
natural gas (LNG) exports to Europe by the most in five years
as prices in the region are at their highest since 2006.
Qatari shipments to Europe under medium- or long-term
contracts will rise 22 percent next year, the biggest jump
since 2009, according to data from Poten & Partners Inc.,
a New York-based shipbroker. Centrica Plc, the U.K.s
biggest supplier of energy to homes, last month extended an
import contract with state-owned Qatar Liquefied Gas Co., the
worlds biggest LNG producer, to December 2018 and
increased volumes by 20 percent.
We are offering good deals because we are ready to
sell, Ibrahim Al Ibrahim, a vice chairman of Qatari
state-owned LNG producer Ras Laffan Liquefied Natural Gas Co.
and the emirs economic adviser, said in an interview in
Doha. We have a certain amount of gas. We want to sell
it. We will sell it.
The Gulf nation, which this year signed supply accords with
Germanys EON SE and Petroliam Nasional Bhds U.K.
unit is increasing shipments to Europe
as it from 2015 will face
competition from Australian project
s that are closer to Asia,
home to the worlds biggest consumers. Australia is
forecast to overtake Qatar as the largest LNG producer by
2020. The U.S. will start exporting the super-chilled gas by
2016, the International Energy Agency in Paris said in June.
Qatar will supply an extra 6.64 million metric tons to Europe
in 2014 in addition to the 19.65 million contracted into the
region this year, the Poten data show. Thats the
biggest jump since 2009, when the Gulf nation started three
of the worlds six largest production plants. Europe
will receive a total of
71.5 million tons of LNG under contracts next year, according
The Qataris are acutely aware of the potential
competitive threat posed by the Australians, Trevor Sikorski,
head of natural gas, coal and carbon
at Energy Aspects Ltd. in
London, said in a Dec. 20 research report. For
Qatar, this is about destination options.
The new contracts allow QatarGas to ship volumes to markets
in Asia if prices there are higher, the Doha-based company
said Dec. 17 by e-mail, declining to provide further details
on cost structures.
These recently concluded fully divertible sales
and purchase agreements with Petronas U.K., EON and Centrica
allow QatarGas to meet the needs for LNG in Europe, while
retaining the ability for QatarGas to respond to demand
signals from other regions, such as Asia, by diverting
LNG, the company said.
About three-quarters of global LNG is supplied under medium-
or long-term contracts, mainly linked to oil costs, with the
remainder sold under agreements lasting less than four years
or on spot markets, according to the International Group of
LNG Importers, a Paris-based lobby group.
Spot LNG this month rose to their highest prices since
February as South American utilities and northeast Asian
buyers competed for spare cargoes to offset cuts in
hydroelectric and nuclear power generation. The price in
Northeast Asia, the biggest consuming region, climbed 10
percent from a year earlier to $19 a million British thermal
units in the week to Dec. 16, according to assessments by New
York-based World Gas Intelligence. The average price for spot
shipments delivered to Northeast Asia is $16.47, according to
Bloomberg calculations using WGI data.
Gas for January delivery at the U.K.s National
Balancing Point, Europes biggest market, fell 0.4
percent to 70.15 pence a therm ($11.50 a million Btu) today
on the ICE Futures Europe
exchange in London.
Britains LNG terminals supplied an average 27.1 million
cubic meters a day of gas this year, compared with 38.3
million last year and a record 69.7 million in 2010,
according to flow data from National Grid Plc. The nation was
scheduled to receive one tanker this month, the least since
Bloomberg started compiling ship and port data in April 2011.
Month-ahead gas in the U.K. will fall 3.8 percent to average
$10.1 per million Btu in 2014 as LNG supplies under contract
will increase, Sikorski said.
QatarGas raised the annual volume under the contract with
Windsor, England-based Centrica by 0.6 million tons to 3
million tons from June 2014 to December 2018. EON is set to
get 1.5 million tons a year from QatarGas to Rotterdam for
five years from 2014 while the U.K. unit of Malaysias
Petroliam Nasional is set to receive 1.14 million tons a year
for five years, according to company statements disclosing
We are doing everything we can to get Asia
first, RasGass Ibrahim said Dec. 8. We
dont sell anything at a discount.
LNG prices may reach a record $20 a million Btu in the next
several months as demand measured by growth in regasification
terminals rises five times faster than new liquefaction
capacity in 2014, Bank of America Corp. said Nov. 13. There
will be no major improvements until 2015, when supply from project
s in Australia and the U.S.
start to reach the market, the bank said.
Growing demand in Asia-Pacific, the Middle East and
South America combined with a limited number of LNG project
s coming on-stream over the
next few years is expected to keep LNG prices at significant
premiums to liquid market indices, such as NBP indices,
QatarGas said. While some new supply sources by new
exporters such as Australia and the U.S. are expected to ease
the market in the next half of the decade, strong global LNG
demand growth could still result in a tight market in the