Qatar fallout for oil and LNG shipping fogged by conflicting port authority signals

Qatar sanctions have disrupted shipping but some back and forth on rules has made it difficult to gauge as Saudi Arabia, the UAE and Egypt seem to be trying to minimise the commercial effect on their own ports.

Above, the LNG carrier Mozah docked at Ras Laffan port near Doha. Maneesh Bakshi / AP Photos

The effects on energy trade flows of the diplomatic squeeze on Qatar by some of its Arabian Gulf neighbours have been hard to gauge so far.

The Saudi-led move to sanction Qatar for alleged support of terrorism has included a ban on all Qatar vessels from the sea territory of Saudi Arabia, the UAE, Bahrain and Egypt, as well as from the air and land. It has certainly disrupted shipping in general.

The latest circular from the port of Fujairah yesterday was different to one issued on June 5, when the sanctions were first imposed, and appeared to redraw restrictions imposed on vessels that might be stopping to take on bunker fuel at the port before continuing their journey on trade routes to Asia or the West.

The move underlines the possibility that the sanctions that hurt Qatar could also, for example, affect the commercial operations of ports such as Fujairah, which gain revenue from ship demurrage and refuelling. Fuj­airah is the main fuel bunkering port in the region.

“It will be interesting to see how the measures are now implemented,” said Rania Tadros, a managing partner at Ince & Co marine lawyers in Dubai, referring to the latest circular.

“Of particular relevance is the fact that there is no reference [in the new command] to vessels not being given port clearance if the last port of call or next port of call is Qatar,” she added. “This should mean that vessels which have loaded in Qatar and wish to bunker in Fujairah may be able to do so as long as they are not Qatari flagged or owned.”

The authorities in Saudi Arabia have been vague about how strict the kingdom will be in terms of allowing co-loading of Qatar and Saudi crude, which is typically done to facilitate more efficient shipping of Qatar’s crude to Asian buyers. They have also retracted orders and changed wordings.

“It is unclear whether the Saudi port authority is banning non-Qatari flagged vessels,” said Eugene Lindell, an oil market analyst at JBC Energy consultants.

“A further point of uncertainty is whether Qatar’s West-bound energy flows will be allowed access to the Suez Canal or not,” Mr Lindell added. “Two Qatari LNG [liquefied natural gas] vessels headed for the UK have changed course, with one apparently rerouted to Asia and the other unexpectedly shunning the Suez in favour of the longer Cape route.”

Indeed, while it is not unusual for vessels carrying LNG to alter their course and destination, that activity has increased sharply in the wake of the sanctions.

Noticeably, several LNG vessels in recent days have altered course to bypass Fujairah and head straight for the main Qatar loading port at Ras Laffan.

Traders have noted also that Egypt has not closed Suez for transit of Qatari vessels, but ­Qatar has rerouted a couple of LNG vessels en route to Europe, apparently to avoid Suez trans-shipment fees.

Supplies from the Dolphin pipeline system that brings gas from Qatar’s giant offshore North Field to cover nearly one-third of the UAE’s daily needs of natural gas, plus a significant amount of Oman’s, which is not party to the sanctions, have not been affected.

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