Britain has tapped Qatar as an informal natural gas supplier of last resort in the face of soaring gas prices across Europe, The Independent has learnt, after a visit to the gulf nation by foreign secretary Liz Truss.
Pressure to ensure gas supply has mounted amid record prices across the EU and in Britain. Pandemic production disruption, lack of UK storage capacity and slimmer stores in major EU economies have left many countries scrambling to top up supplies of natural gas this winter.
Energy suppliers this week described gas prices as a “national crisis” and industry estimates suggest that consumers could face a doubling of energy bills when the price cap is reviewed in April next year.
The business secretary, along with Ofgem and energy suppliers, were set to continue crisis talks this week after failing to reach a solution.
Two sources familiar with the talks have suggested nothing short of a radical intervention — such as scrapping VAT or green levies — will be enough to mitigate the hit to households from higher bills.
The Europe-wide energy crunch has seen Serbia curb supplies to consumers, and last week, Kosovo’s distribution system operator announced it would introduce rolling two-hour blackouts to conserve energy from Thursday. Major European economies France and Germany are also grappling with energy price spikes. France is also faced with a greater dependency on gas as much of its nuclear power capability is offline this winter.
Britain faces a twin problem of cost and safeguarding supply. Against a backdrop of diminished capacity to store gas domestically, the UK brokered an informal arrangement with Qatar to keep gas deliveries flowing, as it prepares ground for a full strategic partnership agreement in 2022.
This effort is aimed at reducing dependence on Norway and the United States. “It avoids putting our eggs in too few baskets,” according to a person with knowledge of the talks with Qatar.
The government has denied that Qatar is performing a “formal” role as a supplier of last resort. But sources familiar with shipments into the Isle of Grain terminal near London, and the Qatar Energy co-owned South Hook LNG terminal in Wales, believe there has been an increase in shipments since Ms Truss visited the gulf state for talks in October. The sources say these shipments are in addition to those agreed by contracts in place earlier in 2021.
Existing commercial relationships between Qatar and UK-based buyers, such as Centrica, make it easier for the government to encourage greater supply without saying that it has directly requested additional shipments, The Independent understands.
Kwasi Kwarteng, business secretary, is also understood to have been party to some discussions with Qatari counterparts in recent months.
A government spokesperson said: “Qatar continues to be a supplier of liquefied natural gas to UK buyers but is not a formal supplier of last resort and we have not requested or secured any additional shipments from the Qatari government.”
Britain’s gas supply remains “absolutely secure” with enough delivery capacity to meet demand, the spokesperson insisted.
Centrica declined to comment, while the government of Qatar did not respond to a request for comment.
Source Link Energy crisis: Britain leans on gas shipments from Qatar to ease supply squeeze