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Saturday, January 22, 2022

UK asks Qatar to develop into fuel ‘provider of final resort’

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The UK has held talks with Qatar over a long-term fuel association that may make the Gulf state a “provider of final resort”, in response to individuals briefed on the discussions.

Such a deal would assist guarantee a secure supply of LNG from Qatar even when world provides are tight. A worldwide fuel provide scarcity has brought about a surge in costs in current months, leaving power intensive industries and suppliers within the UK struggling and lots of shoppers dealing with a pointy rise in family payments.

Qatar, the world’s largest exporter of liquefied pure fuel, has additionally rerouted 4 giant tankers to the UK over the previous two weeks. An individual acquainted with the talks stated the shipments got here after Boris Johnson, UK prime minister, requested Sheikh Tamim bin Hamad al-Thani, the Qatari emir, at a current assembly for assist.

The 2 leaders met on the UN Basic Meeting in September and agreed to “deepen” the connection between the 2 international locations, which have already got sturdy enterprise, diplomatic and navy 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 power minister, on the margins of a UK world funding summit final month.

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

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

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

One other individual briefed on the discussions stated: “The UK realises it wants a long-term deal to have a secure power provide to the purpose they develop into carbon impartial, nevertheless it’s not but clear how this may very well be finished.”

The current fuel scarcity has been attributable to a surge in demand as economies rebound from the pandemic, whereas Russia has restricted fuel exports to western Europe.

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

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

Fuel accounts for about 40 per cent of UK electrical energy technology and heats the vast majority of houses. It’s anticipated to stay a key gas regardless that the nation is pursuing a web zero goal by 2050.

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

As output from the North Sea has declined, the UK has pursued a market-based import technique — now accountable for assembly half of all demand — hinging on the provision of LNG 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 fuel provide may go away patrons struggling to safe sufficient throughout a provide crunch.

In contrast to a lot of its friends, the UK has minimal storage capability, with the equal of only some days of peak winter fuel 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 fastened contracts with international locations within the area. The Gulf state, which has vital investments within the UK, has this 12 months fallen off the UK authorities’s record of most important fuel suppliers.

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

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.

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 an alternative, Qatar will promote the fuel into the UK market.

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 nearly a 3rd of the UK’s common month-to-month fuel imports. Satellite tv for pc monitoring exhibits that three of the vessels’ locations modified to the UK in late October.

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