World’s second-biggest LNG producer appeals to EU over resale strategy – reports

Doha is exploring opportunities for long-term gas supply contracts with the bloc instead of spot market agreements

The world’s second-biggest producer of liquified natural gas (LNG), Qatar, has reportedly requested that the European Union restrict the reselling of its gas outside the bloc, if it is to provide emergency shipments in the event of a disruption of deliveries from Russia.

“Qatar’s supply wouldn’t be conditional on requests. But the issues need to be dealt with to ensure long-term and short-term solutions for Europe’s LNG crisis,” unnamed sources briefed on the talks said, as quoted by Reuters.

The news comes amid the continued speculation fueled by the US that Russia is preparing to invade Ukraine. In the event of a military conflict, Moscow has been threatened with severe economic sanctions that may target the country’s energy exports.

Russian gas supplies account for nearly 40% of Europe’s consumption. Any interruption will inevitably exacerbate the existing energy crunch amid the rapid recovery of major economies after the pandemic-related slowdown.

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Although Qatari producers lack enough spare gas, Doha has pledged to divert some volume from its Asian consumers with mediation from Washington. However, sources told Reuters that no such request has so far been made.

Qatar also wants the EU to conclude a 2018 investigation into the country’s long-term contracts, which the European Commission had said might be inhibiting the free flow of gas in Europe and its single gas market.

“That will ensure the EU can enter into long-term contracts with Qatar and others, instead of more costly spot contracts or searching for short-term solutions during a crisis,” the source said, as quoted by the agency.

Doha is also asking for guarantees that EU member states will divert any surplus LNG only within the bloc.

“If not implemented, emergency shipments to the EU could be resold as spot shipments for a profit out of the EU, basically prolonging the energy shortage in the EU,” the source said.

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