An escalating diplomatic rift between Persian Gulf states is already changing destinations for U.S. LNG cargoes.
The Maran Gas Amphipolis LNG tanker on June 6 changed course to head for the Jebel Ali port in Dubai, according to data on ship-tracking website MarineTraffic.com. Reuters reported June 8 that Royal Dutch Shell plc sent the replacement U.S. cargo under its deal to supply the Dubai Supply Authority, after the United Arab Emirates banned vessels from Qatar, where Shell typically sources LNG for Dubai.
Qatar is the world's largest LNG supplier, accounting for roughly 30% of global LNG trade in 2016, according to the International Gas Union. Saudi Arabia on June 5 led a group of Arab states in cutting diplomatic ties with Qatar. Saudi Arabia's state-run news agency accused Qatar of involvement with "destabilizing" groups, including the Muslim Brotherhood, the Islamic State and al-Qaida. Qatar has denied the allegations.
Industry observers have said supply disruptions to non-Arab countries are unlikely, and U.S. LNG from Cheniere Energy Inc.'s Sabine Pass export terminal that is free of destination restrictions could fill in for Qatari shipments to LNG importers such as the UAE.
"I think that the availability of flexible LNG cargoes is very important for security of supply at the time of any sudden interruption," said Sara Vakhshouri, a nonresident senior fellow at the Atlantic Council's Global Energy Center, said at a June 7 event. "We saw during the Fukushima event that it was very hard to exchange that trade flow."
The situation could have benefits for developers of U.S. export terminals seeking to sign long-term contracts amid a glutted LNG market, said David Goldwyn, a former U.S. Department of State special envoy and the president of Goldwyn Global Strategies. Goldwyn made his comments in a June 5 interview.
"It's a very fierce competition for market, and so as U.S. [exporters] go to Asian customers — China, Korea, Taiwan, Thailand — to say, 'Buy ours versus buy someone else's,' their pitch is they are more long-term cost-competitive, and they are more long-term reliable," Goldwyn said. "No one has really questioned the reliability of Qatar LNG to any significant degree, but they've got a big question right now, and that will impact marketability."
From February 2016 to March 2017, the UAE received 3.39 Bcf of U.S. LNG, according to the most recent U.S. Department of Energy data. Kuwait received 13.8 Bcf.