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Posted by December 20, 2017

Qatargas Inks Deal to Deliver LNG to Austria's OMV

State-run Qatargas on Wednesday agreed a sale and purchase deal with Austrian oil and gas group OMV to deliver up to 1.1 million tonnes of liquefied natural gas annually for five years.

From January 2019, the gas will be provided by Qatar Liquefied Gas Co, a venture between Qatar Petroleum and Shell . It will be delivered to the Gate LNG Terminal in the Netherlands on board Qatargas’ chartered LNG vessels.

Facing threats to its market share in Europe from a wave of new U.S. supply and in Asia from new Australian plants, Qatar has sealed similar deals with Uniper, RWE Supply and Trading, Centrica and Petronas UK to secure access to northwest European import terminals.

The deals, many of which give Qatar discretion to divert supply elsewhere, provide a valuable fallback option in case demand in its main market, Asia, declines.

They also head off potential competitive threats from exporters in the United States targeting Europe as a destination by preserving Qatar's market access.

Just this month OMV agreed to import LNG from Cheniere Energy's Sabine Pass liquefaction plant in Louisiana, underscoring the brewing market share battle for European terminal access rights.

Qatar, the world's biggest LNG producer, is particularly vulnerable because a significant chunk of its annual 77 million tonnes production capacity is not tied up in long-term deals.

A slew of supply deals with Japanese and Asian buyers set to expire in coming years will only compound this problem, trade sources said.

Under the deal with OMV, Qatargas has agreed to deliver a certain fixed volume of supply, a source with knowledge of the matter said.

The remaining cargoes can be diverted.

Qatari cargoes go toward filling OMV's 3 billion cubic metres of import capacity at the Gate terminal.

"We will make a significantly greater effort to win LNG for the market because we have not fully utilised our capacity at our Rotterdam (LNG) terminal, even if we take into consideration the (Qatar) LNG contracts," OMV Chief Executive Rainer Seele said on Wednesday.

"OMV's target, as an LNG strategy, will be full capacity utilisation of our re-gas terminal in Rotterdam."

Europe's LNG import terminals, especially in the northwest of the continent, suffer from under-use as global LNG supplies have gravitated to the most lucrative markets in Asia, where prices typically fetch wide premiums.
Reporting by Andrew Torchia and Oleg Vukmanovic, additional reporting by Shadia Nasralla in Vienna
liquefied natural gasCentricaCheniere Energy