Qatar seeks gasoil from GCC even as countries sever ties

SINGAPORE / Reuters

Qatar Petroleum is still seeking gasoil from countries in the Gulf Cooperation Council (GCC) even as some members of the group have severed ties with the country, said two trading sources on Monday.
The state-run company was looking for up to two gasoil cargoes a month for delivery over July to September in a tender that closes on Monday. Qatar Petroleum has not amended the bid, the sources said.
One of the requirements of the tender was that the cargoes originate from the GCC, whose member countries include the United Arab Emirates, Bahrain, Saudi Arabia, Oman, Qatar and Kuwait and Yemen. “They have not amended the tender from what I can see so far, but perhaps it’s still early hours,” said one of the sources, a Gulf-based trader said.
Saudi Arabia, Egypt, the UAE and Bahrain cut their ties with Qatar on Monday, accusing it of supporting terrorism, opening up the worst rift in years among some of the most powerful states in the Arab world.
The coordinated move dramatically escalates a dispute over Qatar’s support of the Muslim Brotherhood and adds accusations that Doha even backs the agenda of regional arch-rival Iran.
Qatar Petroleum is not typically a buyer of gasoil but has been importing the fuel due to some supply issues in its domestic market, the traders said. While the traders expect the tender to likely be re-issued or cancelled given the latest development, they do not expect a major impact on flows of the fuel.
“Qatar is a regular exporter of gas-to-liquid (GTL) diesel from the Pearl GTL (plant) which (Royal Dutch Shell) partners, so Shell can easily source the gasoil from elsewhere if needed,” said the second source, a Singapore-based trader.
Qatar Petroleum’s exports of jet fuel are unlikely to be disrupted as the aviation fuel is usually shipped to international markets, said the first source. “I think the biggest impact will be on LNG, which stays in the region,” the source added.
Qatar meets almost one-third of global LNG demand and Egypt, which struggles to meet its electricity needs, has imported an average 857,000 cubic metres per month of LNG from Qatar since January 2016, according to shipping data in Thomson Reuters Eikon. The fuel is used largely for power generation.
Announcing the closure of transport ties with Qatar, the three Gulf states gave Qatari visitors and residents two weeks to leave their countries. Qatar was also expelled from a Saudi-led coalition fighting in Yemen.
The measures are more severe than during a previous eight-month rift in 2014, when Saudi Arabia, Bahrain and the UAE withdrew their ambassadors from Doha, again alleging Qatari support for militant groups. At that time, travel links were maintained and Qataris were not expelled.
A split between Doha and its closest allies can have repercussions around the Middle East, where Gulf states have used their
financial and political power to influe-
nce events in Libya, Egypt, Syria, Iraq and Yemen.
The diplomatic broadside threatens the international prestige of Qatar, which hosts a large US military base and is set to host the 2022 World Cup. It has for years presented itself as a mediator and power broker for the region’s many disputes.