(Corrects paragraph 6 to read: "Traders worry that Egypt might
bar tankers carrying Qatari cargoes from using the Suez Canal"
instead of "Egypt has also banned Qatari ships from its waters")
By Oleg Vukmanovic
LONDON, June 8 The escalating diplomatic
conflict between Qatar and several of its Middle East neighbours
has roiled the liquefied natural gas trade, causing at least one
tanker to change course and UK gas prices to spike.
Saudi Arabia, the United Arab Emirates, Egypt and others
this week severed diplomatic and transport links with Qatar, the
world's biggest LNG producer, accusing it of sponsoring
In one of the earliest signs of the effect on the LNG
market, Royal Dutch Shell sent an LNG cargo from the
United States to Dubai, shipping data shows, after the United
Arab Emirates banned Qatari ships from entering UAE ports.
A cluster of 17 LNG tankers are now moored off the coast of
the Qatari LNG export facility at Ras Laffan, up from seven on
Gas prices in the United Kingdom spiked on Thursday, with
the UK National Balancing Point (NBP) price for July
up over 4.5 percent after two Qatari tankers that
were likely bound for the UK changed course, according to
Reuters shipping data.
It is unclear why those tankers shifted movements, though
traders said they may be diverted around the continent of Africa
rather than transit the Suez Canal, which is where they were
expected to go. Traders worry that Egypt might bar tankers
carrying Qatari cargoes from using the Suez Canal, though it is
bound by international treaties not to block the canal.
Analysts still do not see an interruption in supply in the
LNG market, even with Qatar's role as the world's largest
"Only Egypt and the UAE are boycotting Qatari cargos so they
are the only countries that might see U.S. volume replace
Qatari," said Theodore Michael, senior LNG analyst at energy
data provider Genscape in Boulder, Colorado.
Qatar's foreign minister Sheikh Mohammed bin Abdulrahman
al-Thani said the UAE was "exploiting a trading position as a
political tool," noting about 40 percent of UAE power depends on
natural gas from Qatar.
As exclusion zones took effect, Qatar's fleet of LNG vessels
anchored off the UAE's port in Fujairah prior to the diplomatic
cut-off has moved out.
Shell has a deal to supply the Dubai Supply Authority
(DUSUP) with LNG which it typically sources from Qatar. But the
ban meant it had to source the LNG from elsewhere.
Shell's Maran Gas Amphipolis tanker, carrying around 163,500
cubic metres of LNG from Cheniere's Sabine Pass LNG export
terminal in Louisiana, was initially headed toward Kuwait's port
of Mina Al-Ahmadi but rerouted Wednesday for Dubai's port of
The tanker is currently unloading at DUSUP's floating import
terminal at Jebel Ali, data showed.
"Shell, as the largest LNG trader, would have a high
probability of managing some of this," said Robert Ineson,
managing director global LNG at IHS Markit in the Houston area.
"A shutdown of Qatar's exports, either by pipeline or via
LNG, would be highly disruptive to global gas markets. We think
this is not likely."
Eben Burnham-Snyder, spokesman at Cheniere Energy Inc
said earlier this week that the company - currently the
only supplier of U.S. LNG - will keep sending cargos around the
world. U.S. cargoes can be rerouted based on market conditions.
(Reporting by Oleg Vukmanovic in London, Tom Finn in Dubai and
Scott DiSavino in New York; Writing by Scott DiSavino; Editing
by David Gaffen and James Dalgleish)