QatarEnergy on Thursday warned that liquefied natural gas deliveries may be delayed due to disruption in the Red Sea but said production had not been affected.
The ongoing tensions in the Red Sea area may hit the scheduling of some deliveries as cargo vessels take alternative routes but "shipments from Qatar are being managed with our valued buyers", the state-run energy company said on Thursday.
“Qatar’s LNG production continues uninterrupted and our commitment to ensuring the reliable supply of LNG to our customers remains unwavering,” the company said.
QatarEnergy, the world’s second-largest LNG exporter, suspended shipments through the Red Sea this month after a rise in attacks by Houthi rebels in the vital route that handles about 12 per cent of global trade.
On Wednesday, the US carried out more strikes in Yemen, destroying two Houthi anti-ship missiles that posed an “imminent threat” to ships in the Red Sea.
It came a day after the US and UK launched their latest air strikes on Houthi positions in Yemen, aimed at missiles and eight storage sites.
In Europe, Italy and Poland source a significant portion of their LNG from the Middle East.
Italy’s Eni said it was unconcerned by delays caused by the rerouting of ships round the Cape of Good Hope.
“For Eni, Qatari supplies to Italy are limited at the moment," a company representative told The National.
"Furthermore, given the current level of storage and demand, any delays in deliveries … do not give rise to particular concerns at present."
The primary source of gas coming to Italy is piped from Algeria, while the rest comprises LNG primarily from Egypt, Congo, Algeria, Qatar, Nigeria and Angola, the representative added.
Rerouting vessels round the Cape, Africa's southernmost tip, is thought to add 12.5 days to a voyage each way at about 30kph – or 16 knots in shipping terms – so an additional 15-20 ships might be needed to deliver the same volume over the year, Rystad Energy estimated.
Last year about 15.5 million tonnes of LNG was shipped through the Red Sea from the Middle East to Europe, representing nearly 13 per cent of the continent’s annual supply, the Norway-based consultancy said in a research note on Thursday.
“An extended shut-in of the Red Sea route from the Middle East poses a supply risk to Europe, although the price impact will be delayed until Europe’s gas storage has been drawn down sufficiently,” said Kaushal Ramesh, vice president of LNG and Power Markets Research at Rystad.
“It is unclear if the prospect of sustained additional voyage time would be acceptable to Qatar, or the prospect of lost canal fees would be acceptable to Egypt."
Meanwhile in Europe, gas prices have so far been immune to the geopolitical tensions, as existing stockpiles are high with industrial demand lower than expected.
Dutch Title Transfer Facility gas futures, the benchmark European contract, were trading at €29.10 ($31.70) per megawatt hour on Thursday after falling more than 14 per cent since the start of the year.
“North-west Europe has seen temperatures fluctuate widely in January, with the past two weeks tracking at or below the minimum of the 2019-2023 range,” Mr Ramesh said.
“However, even this has failed to support prices, demonstrating the extent of the prevailing bearish sentiment."
In November, the European Commission reduced its expectations of 2023 gross domestic product growth to 0.6 per cent, with the outlook for manufacturing in 2024 also remaining weak, linked to the impending global economic slowdown.
