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Qatargas eyes Europe for LNG supply deals

As the Asian LNG market weakens, Qatargas is looking to Britain and the Netherlands to expand import deals into Europe

Qatar is in the top three of LNG suppliers and is looking to expand its market as Asian demand weakens.
Qatar is in the top three of LNG suppliers and is looking to expand its market as Asian demand weakens.

Qatargas is looking further afield to expand import deals into the European market, according to sources. 

In the light of a looming global glut of gas supplies, Qatargas is looking to Britain and the Netherlands to expand import deals into Europe.

As the US and Australia take a bite out of Qatar’s prized Asian markets, the world's biggest exporter of liquefied natural gas (LNG) must lock in buyers for its unsold supply.

Slowing demand globally is only adding to producer woes, thrusting Europe's gas markets and dozens of under-used import terminals into the spotlight, Reuters reports.

Petronas UK Ltd has been approached and talks have been held with Qatargas in an effort to gain greater access to the Dragon import terminal in Wales, as well as with Uniper, for the Gate terminal in Rotterdam.

Stefaan Adriaens, commercial manager at Gate, said he could not comment on whether Qatargas was interested in increasing capacity at the terminal either via Uniper or directly.

"They see competition in Asia, so if they are looking for capacity, then I presume it's to have an alternative to Asia," he said.

Import capacity at Gate and other northwest European terminals is becoming more valuable in response to the start of U.S. LNG exports.

"As more people are looking to Europe the capacity value has increased, whereas in other areas it's quite the contrary. Everybody was hoping for Asia demand but there demand was slower so I think capacity value has decreased there," he said.

Qatargas 4, a joint venture between Qatargas and Royal Dutch Shell, signed a deal with Petronas, in 2013.

The five-year deal was to supply 1.14 million tonnes a year (mtpa) to Petronas' half-share of the Dragon terminal at Milford Haven.

This was followed by a five-year agreement with E.ON Global Commodities to ship 1.5 mtpa to the Gate terminal.

The flexibility of the deals means that Qatar is not obliged to ship LNG to Britain or the Netherlands and can divert cargoes at will.

Meanwhile, companies with import rights at Dragon and Gate effectively gave Qatar free options to make use of their capacity, in an effort to create business.

The weak Asian demand coupled with sgrowing supply makes Europe an increasingly attractive destination for cargoes, although previously Qatari deliveries to Dragon/Gate have been rare.

Talks between Petronas and Qatargas over expanding the existing deal at Dragon initially sought to double volumes and extend the duration of the deal by up to 10 years, a source disclosed, with a proposal also made to commit Qatargas to delivering a third of the overall volume, he said.

At Gate, the options revolve around obtaining supply guarantees from Qatargas or making it pay for optional import slots, sources said.

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