09/06/2017 by Alibra Shipping 0 Comments
QATAR: A GAME OF CHESS
Arab states this week moved to isolate the government in Doha, which has complicated shipments for Qatar, the world’s biggest exporter of liquefied natural gas.
The United Arab Emirates (UAE), Saudi Arabia, Egypt and Bahrain said on Monday they would sever all ties including transport links with Qatar. Ships carrying Qatari cargoes, including those chartered by non-Qatari companies, will be prevented from calling at major ports in the UAE, Bahrain and Saudi Arabia, including Jebel Ali in Dubai. Vessels carrying the Qatari flag and vessels owned or operated by Qatar are also subject to the ban. Qatar has so far not imposed any counter-restrictions.
Major traders such as Shell and Trafigura have told press that they are loading LNG in Qatar as normal. Spot LNG prices have so far not reacted to the blockade.
In the container market, Evergreen and OOCL have suspended shipping services to Qatar in light of the ban. Maersk has also said it is unable to transport goods in or out of Qatar because it cannot tranship cargo through Jebel Ali in Dubai.
Although Egypt is one of the countries that has isolated Qatar, it looks unlikely that the country will ban access to the Suez Canal for Qatari vessels. However, Egypt could opt to reduce the canal-fee discount offered to LNG carriers, thus making transit for Qatari vessels more expensive, according to research from the Oxford Institute of Energy Studies.
Crude oil and condensate are reportedly being loaded as normal in the Gulf; however, there have already been some effects on vessel movements. For crude tankers, reports suggest there will no longer be a direct point-to-point voyage between Qatari ports and Fujairah and ports in Bahrain (or any of the other countries that have imposed the ban). However, cargoes can still be carried if the vessel calls at an intermediate port in a “neutral” country. Depending on the wording of the charterparty, shipowners may therefore be able to charge more freight if vessels have to call at additional ports.
The ban has reportedly led to a flurry of cargo-swapping by oil companies, which can also lead to additional operational expenses. Smaller companies with only a few cargoes to trade cannot swap parcels as flexibly. This too can drive up freight costs.
The port ban will, however, leaves Qatari vessels facing higher costs related to bunkering.
Qatar-owned ships will be forced to find new ports at which to bunker, having been banned by the UAE from refuelling at Fujairah. The UAE has, however, rescinded its original plans to ban ships arriving from or destined to Qatar.
This lack of ready access to bunkering facilities may turn into a headache for Qatar in the coming months. Vessels could alternatively bunker in Gibraltar, Singapore and Oman, but this would add extra voyage time and costs to vessel operation, depending on the route taken. It could also drive up bunker costs – Fujairah prices are usually cheaper than at other major bunkering hubs and prices could rise further at ports like Singapore.
AIS data shows 75 Qatar-owned vessels are present in the Middle East Gulf and Gulf of Oman area at the moment, many of which have been repositioned into Qatari waters from UAE, Bahrain and Saudi territory. These vessels include just over half of Qatar’s fleet of Q-Flex LNG carriers (14 out of a total 27 vessels; each around 216,000 cbm capacity) – plus three of Qatar’s 14 QMAX LNG carriers, the world’s largest class of LNG carrier (each around 260,000 cbm).
A great many Qatar-owned OSVs are present in the area, which looks to be the sector immediately worst affected by lack of access to bunkering at Fujairah.
US ExxonMobil, a major stakeholder in Qatari gas and LNG projects, has said it does not foresee the blockade having impact on the global LNG market. Nevertheless, it is near impossible to predict the long-term outcome.
Qatar has big plans to debottleneck its LNG infrastructure, which reports say is a signal that the country intends to compete for global market share as new projects in the US and Australia come onstream.