Singapore/London/New Delhi: Saudi Arabia and key allies on Monday cut ties with Qatar, the world’s top seller of liquefied natural gas (LNG), stoking concern over supply disruptions to neighbouring countries spilling over into global energy markets.
In New Delhi, foreign minister Sushma Swaraj said the rift would have no impact on India, calling it an internal matter of the Gulf Cooperation Council (GCC). “All we are concerned about is that no Indian should get trapped in the current situation,” she said.
Saudi Arabia, along with the United Arab Emirates (UAE) and Egypt—both highly reliant on Qatari gas via pipeline and LNG—and Bahrain said they would sever all ties including transport links with Qatar.
They accuse Qatar, which supplies roughly a third of global LNG, of supporting extremism.
US secretary of state Rex Tillerson, who accompanied President Donald Trump on his trip to Saudi Arabia last month, was CEO of Exxon Mobil, Qatar’s key Western partner in building its giant LNG export plants.
LNG traders took a wait-and-see approach, alert to potential disruption of regional energy flows but erring on the assumption that any trade shocks could be contained given well-supplied global markets.
Qatar’s top clients in Japan and India quickly received reassurances that supplies would continue as usual.
Petronet LNG Ltd’s managing director and chief executive officer Prabhat Singh said that the company’s imports of LNG from Qatar hadn’t been affected.
We are getting one LNG cargo every three days. The feedback from our workers and our shipping consortium is that the route is clean and clear. As of today, there is no issue.” Singh said. Petronet receives more than 10 shipments of 150,000 cubic metres of LNG in a month.
An Indian official said on condition of anonymity that Qatar had informed the government that the 8.5 million tonne supply deal with Petronet LNG will continue uninterrupted. India does not import any oil from Qatar.
Meanwhile, within hours of the diplomatic break, the UAE barred all vessels coming to or from Qatar using its popular anchorage point off Fujairah.
The ban impacts about six LNG vessels linked to Qatar now anchored in the Fujairah zone which may need to be moved out, according to shipping data on Thomson Reuters.
But there was little sign yet of LNG supply being hit.
Qatar vs its Arab neighbours: How the diplomatic rift unfolded
“I cannot see this impacting exports of Qatari LNG outside the Arab world at all and it won’t likely impact LNG and gas pipeline exports within the Arab world either,” said Morten Frisch, an independent LNG and gas industry consultant.
Still, traders startled by the development began to plan for all eventualities, especially any upsets to piped gas supplies from Qatar to the UAE.
The UAE consumes 1.8 billion cubic feet/day of Qatari gas via the Dolphin pipeline, and has LNG purchase agreements with its neighbour, leaving it doubly exposed to tit-for-tat measures, said industry officials and traders.
In India, the Kerala government on Monday reached out to the central government, seeking intervention for the support of Indians living in Qatar. Kerala chief minister Pinarayi Vijayan said in a Facebook post that 300,000 out of the nearly 650,000 Indians in Qatar were from Kerala.