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Charles is a writer for Oilprice.com
A Qatari LNG cargo is traveling north in the Red Sea to deliver gas to Europe via the Suez Canal in a rare shipment on the shortest but dangerous route to Europe amid the Houthi threats to tankers in the southern Red Sea and the Bab el-Mandeb Strait.
The tanker loaded LNG from Qatar in August and is now moving north in the Red Sea with Poland as its destination, Bloomberg reported on Monday, quoting vessel-tracking data it had compiled.
Qatar’s state firm QatarEnergy has a term contract with Polish energy group Orlen, as well as with other European buyers, to supply LNG to the European market.
But since the Iran war began, the Strait of Hormuz was closed, and attacks damaged Qatar’s liquefaction complex Ras Laffan, the world’s single biggest such facility; QatarEnergy has extended each month the force majeure on deliveries it first announced in early March.
Qatar’s LNG exports are nowhere near the pace and level of recovery seen in the crude oil exports from the Middle East.
Most LNG carriers are traveling in dark mode through Hormuz, making tracking trickier than ever and further complicating estimates about flows and global supply balances.
Some Qatari and UAE cargoes have managed to transit the Strait of Hormuz in recent weeks, but volumes are too low to move the needle of the global LNG balance.
LNG traffic at the Strait of Hormuz appears to be ticking up despite increased threats to shipments in the chokepoint in recent days and the escalation on the Saudi-Houthi front. However, LNG flows remain over 75% below the levels seen before the Iran war.
As a result of the lack of Qatari gas, Asian LNG demand is declining amid high prices, while Europe is paying up for supply, but European storage sites are only 74% full this week, compared to over 86% for this time last year and the past five years.
The rare shipment of Qatari LNG through the Red Sea observed by Bloomberg would speed up the delivery of the cargo to Europe, instead of going around the Cape of Good Hope in Africa.
By Charles Kennedy for Oilprice.com
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