GCC diplomatic crisis could affect natural gas supplies

05 June 2017

Two of the countries blockading Qatar are reliant on its gas to meet domestic demand

The diplomatic crisis between Qatar and four Arab states could have significant implications on energy supplies in the region as the market waits to see how Doha reacts to measures disrupting its economy.

Saudi Arabia, the UAE, Bahrain and Egypt have cut off diplomatic ties to Qatar and closed air and sea ports, which is likely to affect imports of food and other essential goods to Qatar.

Oil prices rose more than 1 per cent in the aftermath of the announcements, but the real implications of the fractured ties between the GCC countries could be felt on gas supplies.

The Dolphin Energy pipeline – the only cross-border gas project in the GCC – supplies the UAE with up to 2 billion cubic feet a day (cf/d) of gas. This is the equivalent of about 30 per cent of the UAE’s average daily gas consumption, according to estimates for 2015 from UK-based energy group BP.

Qatar also exports gas to both Egypt and the UAE via liquefied natural gas (LNG) shipments.

Doha has yet to announce any retaliatory measures against the four states. The Foreign Affairs Ministry has released a statement saying “the Qatari government will take all necessary measures to ensure this and to thwart attempts to influence and harm the Qatari society and economy”.

The Dolphin pipeline started pumping gas from Qatari oil fields to the UAE in 2007, the same year the UAE became a net importer of gas.

The UAE, which relies on gas for the majority of power generation, has since installed LNG import terminals to meet domestic demand during the peak summer months.

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