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Europe Gas Supply Vulnerable To Qatar Shipments

90 pct of north-west Europe LNG imports from Qatar; Qatari exports to Europe fell 22 pct in 2011; Economic crisis hits southern Europe gas demand.

January 21, 2012 6:18 by

Europe’s energy supply may be more vulnerable this year as shipborne gas, relied upon to ease dependence on pipelines from suppliers like Russia or Libya, is likely to sail to more lucrative fast-growing Asian markets, analysts said on Friday.

North-west Europe, especially Britain, depended on Qatar for nearly all of its liquefied natural gas (LNG) last year.

But Qatari LNG exports to Europe fell 22 percent in 2011 due to higher demand in Asia after Japan shut down its nuclear power following the March tsunami, and as demand declined from crisis-hit economies in the south of the continent, analysts at Waterborne Energy said in a report.

“In total, 87 percent of the LNG imported into north-west Europe in 2011 came from Qatar’s two liquefaction plants, leaving the region vulnerable to the diversion of cargoes to higher-valued markets in 2012,” Waterborne said.

Britain is particularly threatened by the prospect of lower Qatari supply to Europe – it bought all but one of its import cargoes from the world’s top LNG exporter in the last five months of 2011, Waterborne said.

Asian ports have also caught up with Britain in providing loading facilities big enough to cope with Qatar’s huge Q-Max vessels, an analyst at European utility said.

“This was one of the reasons why Qatar was forced to sell to the UK,” he said.

Qatar’s LNG also passes through the Strait of Hormuz, already in the forefront of the West’s concerns over oil supply as tensions over Iran’s nuclear programme intensify.

Japan’s nuclear shutdowns following the earthquake and tsunami forced it to replace power production by burning, and therefore importing, more gas.

It imported an extra 3.17 million tonnes of LNG from Qatar between March and November 2011 compared with the same period in 2010, Waterborne figures showed.

“Most of the LNG from these sources would have almost certainly been delivered to Europe if Japan’s need had not been so great,” Waterborne said.

Other Asian nations also increased their appetite for LNG last year, importing 69 percent more super-cooled gas from producers in the Atlantic Basin, such as Nigeria and Trinidad, than in 2010.

But weak economic performance led to lower gas demand in southern European nations, while Spain’s LNG imports also declined following the launch of a new Algerian gas import pipeline and state incentives to burn domestic coal in power plants, Waterborne Energy said.

“The outcome for the nine countries in Europe that import LNG suggests that economic factors did play a role in some of the countries in southern Europe, which have been most affected by the Eurozone crisis,” analysts said.

(Editing by William Hardy)

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