Qatar plots big expansion of Welsh gas facilities as UK bets on shift to LNG

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Qatar is investing millions of pounds in expanding a major gas terminal in Wales, as the Government ramps up its reliance on shipments of the liquefied fuel imported from overseas.

Qatar is upgrading its import terminal on the south coast of Wales to allow it to handle about 25pc more liquefied natural gas (LNG) imported from around the world.

State energy company Qatar Energy and ExxonMobil, the US oil giant, are investing heavily to boost capacity at their South Hook LNG terminal in Milford Haven.

It comes as the UK and Europe are scrambling to find new sources of fuel after Russia restricted gas supplies to Europe amid the Kremlin’s war on Ukraine, sending prices soaring. 

Rishi Sunak, the Prime Minister, is poised to announce a major supply deal with the US after the Cop27 climate change summit taking place in Egypt, the Telegraph revealed on Monday.

The US and Qatar, which is hosting the World Cup this month, are the two biggest players in the global market for LNG – gas cooled into liquid form so it can be sent around the world in ships. 

Investment in South Hook LNG comes in tandem with Qatar Energy and ExxonMobil’s development of the $10bn (£8.6bn) new Golden Pass terminal in the US, which is set to be up and running by 2024 and expected to export to the UK. 

Britain has become increasingly reliant on LNG in recent years. It fulfilled about 17pc of the UK’s gas demand in 2021 and is likely to grow in importance as output from the ageing North Sea falls. 

Qatar and partners built the South Hook terminal in 2009 amid a boom in the LNG market. It is one of three UK LNG terminals, the second of which is also in Wales, and the third in Kent. 

The facility can process about 15.6 million tonnes of gas per year, which owners say is equivalent to about 20pc of the UK’s annual gas demand. The terminal is already one of the biggest in Europe.

Qatar wants to increase South Hook’s capacity to almost 20 million tonnes of gas per year, a move which analysts estimate could cost hundreds of millions of pounds. It is expected to be ready in the middle of 2025. 

Both Qatar and the US are already major suppliers of LNG to the UK. Of the 175 shipments sent to the UK between January and September, 51 came from Qatar and 81 came from the US, according to data from S&P Global Platts. 

Global shipments to the UK this year have been far higher than normal as it is acting as a “gas bridge” to Europe, which is scrambling to replace Russian supplies but does not yet have enough import facilities. 

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