Shell Contracts More LNG from Qatargas

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Qatargas announced June 18 the signing of a five-year LNG supply agreement with Shell for “up to” 1.1mn metric tons per year.

Starting January 2019, the sale and purchase agreement (SPA) provides for the supply of LNG from Qatargas-4, the 70%-30% joint venture between Qatar Petroleum and Shell.  It is expected that the LNG will be delivered to either the Dragon (UK) or Gate (Netherlands) import terminals. Shell integrated gas director Maarten Wetselaar said: “Agreements like this support our ability to provide reliable, flexible LNG supply to our customers.” A Qatargas statement did not discuss pricing, but existing supplies into these terminals are priced off local NBP (UK) and TTF (Netherlands) gas hubs.

Qatargas CEO Saad Sherida Al-Kaabi said the flexible volume supply deal “further strengthens our relationship with Shell.”

According to the 2017 GIIGNL (International Group of LNG Importers) annual report, there is an existing 3.6mn mt/yr SPA between Qatargas-4 and Shell from 2011 to 2036, delivered ex ship; it’s understood that the new SPA for “up to 1.1mn mt/yr” will supplement that earlier contract.

Shell and Qatar Petroleum also signed an agreement June 13 to promote new LNG bunkering in Europe and east of Suez.

Qatargas needs to renew contracts lapsing in the early 2020s with northeast Asian LNG buyers, many of which are opting – if they contract new long-term volumes — to source more US or Australian volumes instead. There’s still some resentment in Japan that no price concessions were made, when the country was obliged to step up LNG imports significantly in the wake of the March 2011 Fukushima tsunami disaster.

Al-Kaabi meanwhile pledged June 18 not to cut off pipeline gas supplies to the United Arab Emirates (UAE) via the Dolphin pipeline, despite the diplomatic dispute between the two Gulf nations.

 

Mark Smedley