Russian-Ukraine tension opens new LNG market opportunities
As German axe dangles on Nord Stream 2 pipeline project
Sopuruchi Onwuka
Global gas exporters mainly from Middle East and Africa keenly watch the power play between Western powers and Russia over the security of Ukraine. And precariously located in the middle of the tension is gas supply guarantee to European countries which are leading transition from fossil energy anyway.
With energy transition still a long term ambition, and cold snaps compelling sharp rise in gas demand, world’s natural gas factors including Qatar, United States, Australia and other African countries that play in the spot market are positioning to explore new markets should Europe and Russia clash over Ukraine.
The Oracle Today reports that Qatar is looking for markets for that extra gas as it embarks on a massive LNG output expansion to increase its gas production from current 77 million tons to 127 million tons a year by 2027.
The Oracle Today reports that escalation of the ongoing spat between the Western military allies and Russia over Ukraine could put the Nord Stream pipeline project at risk as geopolitics overshadows the economic ties that sustain the ambitious gas conduit.
Western military allies hosted in NATO are rising in defence of Ukraine, one of its newest allies and weakest link against the rising Sino-Russian power influence. And gas supply concerns are high in Europe over Russia’s military ambition in Ukraine.
Bolstered by alternate arrangements by oil producing allies, Germany said on Tuesday that it could impede the Nord Stream 2 pipeline should Russia invade Ukraine, and President Joe Biden of United States is talks with the Qatari emirate for possible gas supply bridge to Europe should the parties got to war.
Qatar has enormous capacity for liquefied natural gas (LNG) and condensate; and the country is in constant struggle to capture more market shares as more export capacities grow across the globe.
If Germany axes the Nord Stream 2 natural gas pipeline project as threatened by German Chancellor Olaf Scholz on Tuesday as clear signal that Russia could lose the European gas market as part of economic consequences of its ongoing belligerence.
Germany currently holds down commissioning of the pipeline which President Vladimir Putin of Russia said was loaded with gas and ready to deliver.
The European industrial powerhouse requires that commissioning of the pipeline be shifted to July to give time for the operator, Nord Stream 2 AG, to be incorporated in Germany.
Meanwhile, world’s biggest gas exporters comprising Australia, Qatar and the United States are in talks about possible supply intervention should the Russia-Ukraine war happen.
“Talks are going on” over diverting some liquefied natural gas from Asian markets to Europe if President Vladimir Putin cuts supplies to western Europe, a Qatari official said ahead a meeting between Sheikh Tamim bin Hamad Al-Thani and President Joe Biden.
But gas supply from other countries apart from Russia come as LNG which takes longer to arrive and requires regasification facilities to receive into local grids.
Besides, whereas the United States and Australia can respond with large volumes, Qatar hold promise for future and more sustainable energy security for Europe. Up to 95 percent of Qatar’s LNG output is already tied down in supply contracts.
Later the Qatari Minister of State for Energy, Saad Sherida Al-Kaabi, said in a statement that “the volume of gas needed by the EU cannot be replaced by anyone unilaterally, without disturbing supplies to other regions around the world.”
He added that Qatar would not likely break its contracts in Asia for possible intervention in Europe.
In hinting at sustainable market share in Europe, Al-Kaabi who met with European Union’s Commissioner for Energy, Kadri Simson, said the country would explore long term energy security of Europe as it builds more liquefaction plants.
