EC Probe into Qatar LNG 'Surprising': Sources

The European Commission's decision to probe Qatar's long-term LNG supply contracts has surprised industry sources in the UK. On June 21, the director-general for competition, Margrethe Vestager, said: "We have opened an investigation to look at whether there are problematic territorial restriction clauses in gas supply contracts with Qatar Petroleum." 

One source told NGW that his understanding was that the destination restrictions only applied to free on board sales – where the buyer takes title at the liquefaction terminal – as ex-ship restrictions "are of course banned." He said he was not sure what else the EC cold go after; another EC dislike, oil-indexation pricing, could be resolved by the standard practice of a price review clause.

Another said Qatari LNG sales and purchase agreements do allow for cargo diversons. But he added that the Qataris were "ruthless negotiators" and drove "really hard bargains" – at least while it was a sellers' market and they could dictate terms. Also he said, "they are unpopular within the Middle East owing to their approach to supporting certain religious and political factions. One could argue that being tough on the Qatari’s might win you more friends in the Middle East. That said the according to the press release the Qatari’s have about 40% of the imported LNG market for the EU." 

His explanation was that the EU wants to be seen to be tough on any suppliers, not just Gazprom; but also "one cannot help feel this is more political than economic: gas is very political."

QP said the investigation covered it and five of its liquefied natural gas (LNG) subsidiaries that are operated by Qatargas and it looked forward to working with the European Commission to address any queries or concerns they may have in this regard.​