SKK Migas fears Qatar LNG to flood Asian market

By Godang Sitompul

The Indonesian upstream oil and gas authority SKK Migas and state-owned oil and gas company PT Pertamina are closely monitoring the ongoing diplomatic crisis in The Middle East after countries including Saudi Arabia, United Arab Emirates, Bahrain and Egypt cut diplomatic ties with Qatar.

While SKK Migas and Pertamina believe that there may not be significant impact on the global LNG and crude oil markets in the near term, the two are worried if the crisis drags on for longer period.

?SKK Migas is closely monitoring the Qatar (diplomatic) crisis and its impact on global LNG market,? said Head of LNG Marketing Division at SKK Migas, Rayendra Siddik to Petromindo.com on Monday.

Qatar is the world?s largest LNG producer and exporter.

Rayendra said that there are worries that if Qatari LNG vessels destined for Europe will not be allowed to pass through the key Suez Canal shipping route, it will force the vessels to go around through South Africa, which will significantly extend shipping distance and time.

?If as a result of the extended shipping time the European buyers decide to cancel the contracts, the LNG cargoes initially destined for Europe will then flood the Asian market and will affect price. Hopefully, this will not have to happen ?,? Rayendra said.

?We?re still monitoring the situation, but it seems in the near term there?s not impact (on LNG market),? said Vice President for LNG Marketing at Pertamina, Didik Sasongko Widi to Petromindo.com.

Meanwhile, Vice President of Pertamina Integrated Supply Chain, Daniel Purba said that the crisis in Qatar does not affect Indonesia?s LPG import as the country does not buy the fuel from Qatar but from Iran.

Editing by Reiner Simanjuntak