LNG Exports Rerouted Amid Hormuz Blockade
Six months into the blockade of the Strait of Hormuz, Qatar and the UAE are testing ways to keep liquefied natural gas (LNG) moving by rerouting damaged tankers via ship-to-ship transfers (STS). This emergency operation adds significant costs and time to the already complex process.
The recent STS operations involved three LNG cargoes loaded in Qatar and the UAE, which were transferred between vessels off Oman and the UAE before continuing to buyers in Asia. Two of the three transfers involved vessels that had previously been damaged or involved in incidents. The Al Rekayyat, operated by QatarEnergy, was struck by a projectile near Hormuz in July and transferred its cargo to the Qatari tanker Tembek off the UAE coast. Tembek later delivered the LNG to India.
GasLog Shanghai, which was involved in an incident while leaving Hormuz in late July, later transferred its cargo to GasLog Savannah off Oman. A third operation involved ADNOC-controlled Mraweh, which transferred LNG loaded at Das Island to LNG Enugu off Oman. The cargo then continued towards Japan.
A Costly Way Around the Disruption
Ship-to-ship LNG transfers are technically complex and rarely used outside emergencies. Unlike crude oil, which can be transferred between vessels relatively quickly, LNG must be kept at minus 162 degrees Celsius to remain liquid. The transfer requires specialist cryogenic equipment, fenders, tugboats, and trained personnel on both ships.
For these reasons, STS transfers are standard practice in the crude oil industry but remain exceptional in the LNG trade, where they are typically reserved for situations where a vessel cannot complete its voyage. Bogdan Ratiu, commercial and shipping director at LNG Synergy, said most of the recent operations were emergency transfers rather than routine commercial transfers.
“This is a constraint; they have no choice in certain situations,” Ratiu told Euronews. He added that an LNG ship-to-ship transfer can take around 30 to 35 hours and requires specialist equipment, tugboats, fenders, and specialist personnel. “It will easily add over $1 million (€860,600) if STS is involved,” he said.
The Economic Impact
The ongoing war continues to affect traffic through the blockaded Strait of Hormuz, resulting in a severe shortfall in LNG exports from Qatar and the UAE. Between March and June, LNG loadings from Qatar and the UAE fell by 35 billion cubic meters compared with the same period a year earlier, according to the International Energy Agency (IEA).
Qatar exported just 18 LNG cargoes during the first six months of the Iran war, compared with 509 during the same period a year earlier, a decline of around 96%. Qatar is estimated to have lost around $24 billion (€20.7 billion) in gas sales over the period, while QatarEnergy remains under force majeure on some deliveries, with cancellations extending into the second half of the year.
The crisis has significant implications for global energy markets, as the Strait of Hormuz is a critical chokepoint for LNG exports. The ongoing blockade highlights the need for alternative routes and solutions to ensure the continued flow of this vital energy source.
Original Article: Six months into Hormuz blockade, Qatar and UAE test ways to keep LNG moving — Cyprusshippingnews