Rising Gas Prices Linked to Supply and Demand, Not to Ukraine Crisis

Rising Gas Prices Linked to Supply and Demand, Not to Ukraine Crisis By A Robin - February 24, 2022
Minister Saad bin Sherida Al Kaabi

Minister Saad bin Sherida Al Kaabi

HE Minister of State for Energy Affairs Eng. Saad bin Sherida Al Kaabi said that rising gas prices in global markets was caused by the factors of supply, demand and investment, ruling out that it has anything to do with the current Russian-Ukrainian crisis.

In a press conference held today with the participation of HE Minister of Petroleum and Mineral Resources of the Arab Republic of Egypt Tarek El Molla, and HE Secretary-General of the Gas Exporting Countries Forum (GECF) Mohamed Hamel, HE Al Kaabi said the rises in gas prices are not the result of the Russian-Ukrainian crisis, but are mainly due to supply and demand, because liquefied natural gas is currently one of the most important sources of transformation in the field of energy, which makes it difficult to make predictions in this field, in addition to the nature of investments in the sector which requires a long breath, especially as it needs large financing.

HE Al Kaabi noted that the forum did not discuss the developments in Ukraine, because it is not a political forum and has nothing to do with political issues.

In response to a question about the position of gas exporting countries if economic sanctions - not by the United Nations - were imposed on a member state like Russia, HE Al Kaabi said whatever decisions might be taken, it would has nothing to do with the forum. He reiterated that the objectives of the Gas Exporting Countries Forum are not related to political issues, rather the forum is a group that seeks to promote the use of gas and understand the needs of humanity for this clean source of energy.

"We are working together and offer natural gas in the best form as the best fossil energies," HE added.

In response to a question about the existence of talks to supply gas to some European countries, in case if problems with Russia, HE the Minister of State for Energy Affairs said: "We are ready to supply gas to all countries that need us, and we know the extent of problems that can arise in the contracts that we conclude with countries, therefore, we are cautious, and there are many examples that demonstrate the robustness of this."

He added that Qatar has always proven that it is a reliable country in this field, and there are many European countries that have contacted the State of Qatar to supply gas, stressing that the State of Qatar is well-known for respecting the contracts it concludes.

HE the Minister of State for Energy Affairs said that the State of Qatar has a major role in supplying energy and gas to Europe by up to 40%, and there is no other country that does this, and the state has clear contracts.

HE Al Kaabi underlined that Qatar wants to meet EU demands for additional LNG supplies, but most of its exports are already tied to long-term contracts. He said: "Qatar is very clear about the sanctity of contracts. We are known for being tough and abiding by contracts in good times and bad."

HE the Minister of State noted the desire to help the European Union by providing additional quantities within the limits of the available quantities of existing gas, adding: "We will help, but most of our LNG is tied to long-term contracts. I spoke with the European Union Commissioner for Energy, Kadri Simson, a few weeks ago about more supplies."

HE Al Kaabi added that no country can replace Russia, as only about 10-15% of LNG contracts can be transferred to other places. 

HE Minister of State for Energy Affairs Eng. Saad bin Sherida Al Kaabi added: "When we took the final investment decision to increase gas production to 110 million tons and to 126 million tons, some said that this was a violent step from Qatar, but the world proved that it needs more gas, and we would like to prove also to our colleagues and consumers that we are worthy of that trust and we can supply gas."

"We must point out that it is not the European countries that buy gas, but the private sector that does so. Will countries get involved in this? I don't have an answer to that and countries can do that," he said.

"There have been talks during the past weeks, and we are ready to supply gas as much as we can to any party. We want to respect our commitments as well, and we can help in this area and we are known to help our friends when they need us," HE noted.

"In Japan, for example, when the bitter events occurred in Fukushima, we helped Japan for a whole year until they were able to re-use the nuclear facility. This depends on how much you can help, and if you ask us for help, we study and provide it," he added.

"We have some long-term contracts, and they are clear contracts that we cannot change. Sometimes there are some contracts that extend for 25 years and are linked to many things such as technology. As for Britain, there are special contracts and we know that there is a free market in Britain and it buys LNG from Qatar and from other companies," HE Al Kaabi said.

In response to a question about financing the expansion of the North Field from abroad and issuing bonds, HE Eng. Al Kaabi said: "We previously mentioned that we will not go to the financial markets because our financial situation is excellent and there was no intention to go to the financial markets for financing, but we resorted to that when we saw a significant decline in interest rates, which was tempting. We got 12.5 billion dollars at very low prices for 30 and 20 years and that was tempting. It was better for us to take the loan at that time to develop the North Field and we took advantage of the low prices; and there is no intention to issue other bonds for the North Field development project because we took what we wanted. If there are additional projects, we will think about them at the time."

HE the Minister of State for Energy Affairs noted that there is a petrochemical project in Qatar that is currently being worked on, and there will be a loan for this project as before. He denied that Qatar Energy would issue green bonds in the financial markets.

On the other hand, HE Egyptian Minister of Petroleum and Mineral Resources Tarek El Molla said, in response to a question about the volume of Egypt's production of natural gas and the quantities destined for export, that Egypts current production meets the needs of the local market, as it amounts to 1 million cubic feet per day. The surplus is exported through liquefaction stations located in the Mediterranean, and the export volume ranges between 1 billion and 1.200 billion cubic feet, noting that the fluctuation in export quantities is due to Egypts consumption of gas, which varies from season to season.

Regarding Egypt's presence in the Eastern Mediterranean Gas Forum and the Gas Exporting Countries Forum, HE the Minister said that Egypt aims to enhance its role in this industry in order to improve the management of its resources in this field, noting that the Eastern Mediterranean Forum is primarily a forum for consuming countries or transit countries, while the Gas Exporting Countries Forum is a forum for producers.

Regarding the supply of energy to Lebanon, HE the Minister said that Egypt had previously exported gas to Lebanon through the Arab pipeline existed before 2011, but during the past ten years and for obvious reasons, this supply was stopped. Currently, operations are being carried out to rehabilitate the line to resume export and the matter will end in the coming weeks. "We believe that we can re-export gas in the coming weeks, and we do not see that there are problems, but rather some papers that need to be completed in the coming weeks," he said. (QNA)

By A Robin - February 24, 2022

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