South Hook’s First Cargo Heralds Qatar as Key U.K. Gas Supplier

By Ben Farey

Jan. 22 (Bloomberg) -- South Hook LNG, an import terminal in South Wales, will import its first cargo next month, marking Qatar’s arrival as a key natural gas supplier to the U.K.

The Tembek has left the Middle East for the terminal, a venture between Qatar Petroleum, Exxon Mobil Corp. and Total SA, South Hook Terminal Co. said in a statement today. The ship will stop near the U.K. so its arrival coincides with final commissioning steps in the “next few weeks,” it said.

The U.K., Europe’s largest gas consumer, must import more gas as its North Sea fields decline. Qatar has become the world’s largest liquefied natural gas exporter and will be able to supply more than 10 percent of British demand through South Hook, where gas will be stored in five tanks bigger than the Royal Albert Hall.

“They won’t leave the terminal empty,” David Ledesma, an independent energy consultant, said in a phone interview today. The U.K. is a higher-priced market than the U.S. at present, making it more attractive for Qatari shipments, he said.

The Tembek is scheduled to arrive at the Suez canal on Jan. 23, according to ship-tracking data on Bloomberg. From Suez, an LNG carrier can reach south Wales in about a week. The ship, one of a new generation of so-called Q-Flex LNG tankers, has a capacity of 211,885 cubic meters of LNG.

Typically, one or more initial cargoes of LNG are used to cool down a new import facility’s pipes and storage tanks to the correct operating temperature. LNG is natural gas chilled to liquid form at minus 161 degrees Celsius (minus 258 Fahrenheit) to aid transportation and storage.

Qatar Plans

Qatar exported 38 billion cubic meters of gas in 2007, up 24 percent on 2006, according to BP’s Statistical Review of World Energy. The state plans to produce 77 million tons of the fuel by 2010. That’s equal to 106 billion cubic meters of gas, or about the same volume as the U.K. consumes in a year.

The port of Milford Haven in Wales is now home to two receiving terminals. BG Group Plc’s Dragon LNG terminal also awaits commissioning.

The larger South Hook terminal expects to receive as much as 7.5 million tons of LNG a year, or 10.5 billion cubic meters of natural gas, in its first phase. The terminal’s capacity will double by 2012.

Dragon and South Hook together will have a combined import capacity of 19.4 million tons of LNG a year, or 26.7 billion cubic meters of natural gas. That’s almost as much as the annual imports of Spain, currently Europe’s largest LNG importer.

Gas for delivery next month at Henry Hub in Louisiana, the U.S. benchmark price, traded for $4.74 a million British thermal units at 11:54 a.m. U.K. time on the New York Mercantile Exchange. That’s about $3 a million Btus less than February gas in the U.K.

To contact the reporter on this story: Ben Farey in London at bfarey@bloomberg.net