Qatar has long-term commitment to UK’s energy security: al-Marri

A view of the South Hook LNG Terminal. Inset: Al-Marri: Focused

Denise Marray/London

Energy is a hugely politicised subject in the UK with the main industry players under mounting pressure to keep a lid on prices not just from consumers but regulators. Now a big question is looming over who should control the North Sea oil and gas supplies. With Scotland debating whether it should become an independent country, the stakes over management of the remaining reserves are rising. To the extent that Monday saw the UK cabinet convening in Aberdeen, the heartland of the oil and gas industry, in only the second such gathering in Scotland since 1921. Just a few miles away Ministers from the Scottish government held their own talks on this sensitive subject. It was a case of High Noon at the gas field.

Far removed from all this political turmoil, in the South of Wales, lies an important part of the answer to the UK’s energy needs. Energy that travels over 6,811 nautical miles from the Port of Ras Laffan in Qatar to the deep water port of Milford Haven. Energy that arrives in state of the art, double-hulled ships to the South Hook LNG Terminal where the liquefied natural gas (LNG) is converted from a liquid back into a gas and delivered to the UK’s homes and business via the national grid.

In his office overlooking the River Thames in the London Bridge Quarter, and with a view of the Shard where the company will relocate in May, South Hook gas director and general manager, Rashid al-Marri keeps his focus on what his company has to offer. “Our mandate is to maximise the utilisation of the South Hook LNG terminal, and so apart from our core supply agreement with QatarGas, we have also signed agreements with a number of other companies including RasGas, Total, Chevron, ConocoPhillips, Axpo and Noble Group. This means that the UK has access to additional supplies of natural gas, not just from Qatar but potentially from elsewhere in the world,” he said.

South Hook Gas has the capacity to provide around 20% of the UK’s energy supplies. Just one Q-Max vessel supplies enough natural gas to meet London’s demand for a week. “You can see how UK energy security has improved thanks to the arrival of Qatari LNG,” commented al-Marri.

Looking further afield he said: “Europe is no longer an energy island. Thanks to LNG, it now has access to additional supplies from around the world. With improved interconnectivity between the UK and Europe, the energy goes to where it is needed most. For example, in recent years, the UK had record gas exports to Europe thanks to the liquidity in the UK market provided by Qatari LNG.”

Asked to comment on the EU policies needed to ensure that the gas market remains viable for gas shippers and investors, al-Marri said: “There is a need for light touch regulations which include a technology-neutral policy. That is, if you are subsidising a new energy technology, it will be in the expectation that this will be phased out once it becomes mature.” He also called for a better understanding of the risks for investors. “The electoral cycle is five years but the investment cycle is twenty-five years or more, so investors need to be able to assess the potential for the market in the 2030s and 40s, not just 2014,” he said.

He pointed out that Qatar had made a significant, long term commitment to the UK, noting: “When our shareholders (Qatar Petroleum International and Exxon Mobil) and the shareholders in South Hook LNG Terminal decided to invest over £1bn in the UK to establish our businesses, it was because they believe that the UK is an attractive long-term market with benefits for both Qatar and the UK.”

He added: “We have a twenty-five year supply agreement with Qatargas 2. When this project was started, it was part of a full value chain of Qatargas 2 between the offshore facilities, the processing LNG trains in Ras Laffan, the fleet of Q-Max and Q-Flex LNG tankers, the South Hook LNG Terminal and South Hook Gas. That project was around roughly $14bn in total. You can imagine the scale of this project and the sophisticated technology which was used to construct the largest integrated LNG value chain.” When asked about the North Sea gas supplies, where production peaked in 1999, al-Marri commented: “We have seen a decline in UK domestic natural gas production and this means that there is an opportunity for increased LNG imports to meet future demand. Natural gas has been proven to be the cleanest fossil fuel and an affordable and abundant, energy source.”