One of the biggest liquefied natural gas (LNG) exporters, Qatar, is working with importers in China to reschedule or re-route some oil and gas cargoes to the world’s second-largest LNG importer amid the coronavirus outbreak, Qatar said late on Wednesday.
“All concerned Qatari energy companies are already working closely with their Chinese partners to assist in identifying and assessing potential support areas, and ... are actively engaged in accommodating certain rescheduling or re-routing requests for deliveries of Qatari energy products,” the energy minister of Qatar, Saad al-Kaabi, said in a statement, as carried by Reuters.
Al-Kaabi is also chief executive of the state-held firm Qatar Petroleum, which exports the tiny Gulf country’s huge gas resources.
Last week, China National Offshore Oil Corporation (CNOOC), the country’s largest LNG importer, was said to have declared force majeure on deliveries of LNG cargoes and will not be honoring some of the deliveries because of the deadly coronavirus outbreak.
Even before Chinese importers started invoking force majeure on LNG deliveries, LNG prices had hit a decade low, due to warmer winter weather in many parts of Asia, booming new LNG supply - especially from the U.S. and Australia - and slower import growth in China.
Related: Are Oil Markets Overreacting To The Coronavirus?
Last week, spot LNG prices in Asia plunged to a new all-time low of below $3 per million British thermal units (MMBtu), down by $0.85 from a week earlier, as some Chinese importers declared force majeure on spot purchases, industry sources told Reuters last Friday.
Meanwhile, the coronavirus outbreak has prompted analysts to revise down their estimates for Chinese gas demand growth this year, warning of a knock-on effect on global LNG markets. The virus outbreak is additionally depressing China’s already slowing gas demand growth.
The lower LNG imports in China could put the natural gas markets in Europe and Asia under severe stress, Fitch Ratings said on Tuesday.
“This could significantly delay the supply-demand rebalancing expected in 2020,” the rating agency added.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.