The US and Middle Eastern LNG production to come under pressure post the ban on Russian oil and Gas imports

As Europe’s energy security gasps under the pressure from soaring Oil and gas prices and a possible cut-off of natural gas supplies from Russia, the latest decision by the US and the UK to ban imports of Russian Oil and Gas could have long lasting impact on Middle Eastern LNG production and exports. UK’s conventional dependence on Russian gas supplies means that it will now have to shift allegiance to the Middle East and the US for its energy security.

Qatar the world’s largest producer of LNG had already, as early as the last week of February, expressed concerns over upping its production levels over a possible outbreak of war in Ukraine and the stoppage of Natural gas supplies by Russia to NATO member countries. Most of the long-term contracts of Qatar’s LNG have already been locked into by Asian buyers with approximately 10% to 15% of its production available for diversion to Europe.

Outages at Qatar’s LNG terminals 6 and 7 are expected to continue till mid-March. While train no. 6 is offline due to a regular maintenance operation during the shoulder month (transition from winter to summer), the outage at train no. 7 is not regular maintenance and the reason is still unknown. This could lead to a reduction in LNG shipments to the UK for the month of March. Of the 40% of total Russian supplies to Europe, UK gets 2% of the share and the latest ban on Russian imports by UK means that it will have to heavily rely on shipments from the US and the Gulf regions.

The United States on the other hand is trying to leverage the ongoing energy crisis to regain its footing in global power politics by coming to the rescue of its allies in case Russia tries to use energy reliance as a weapon in its war against Ukraine. The Energy Information Authority (EIA) predicts that the US LNG exports could increase to 11.4 billion Cubic Feet per Day in 2022 which is equivalent to 22% of the world’s estimated LNG demand for FY23.