Britain has tapped Qatar as an informal natural gas supplier of last resort in the face of soaring gas prices, The Independent has learned, after foreign secretary Liz Truss visited the Gulf nation in October.
Pressure to ensure gas supply has mounted as prices have risen at record rates across the EU and UK. Pandemic production disruption, lack of UK storage capacity and slimmer stores in major EU economies have left many countries scrambling to top up supplies of natural gas this winter.
Energy suppliers this week described soaring gas prices as a “national crisis” and industry estimates suggest that consumers could face a doubling of energy bills when the price cap is reviewed in April.
The business secretary Kwasi Kwarteng, along with the Office of Gas and Electricity Markets (Ofgem) and energy suppliers, was set to continue crisis talks this week after failing to reach a solution.
Two sources familiar with the talks have suggested nothing short of a radical intervention – such as scrapping VAT or green levies – will be enough to mitigate the hit to households.
The Europe-wide energy crunch has seen Serbia curb supplies to consumers, and last week, Kosovo’s distribution system operator announced it would introduce rolling two-hour blackouts to conserve energy from Thursday.
Major European economies France and Germany are also grappling with energy price spikes while the UK faces a twin problem of cost and safeguarding supply.
Against a backdrop of diminished capacity to store gas domestically, the UK brokered an informal arrangement with Qatar to keep gas deliveries flowing, as it prepares for a full strategic partnership agreement in 2022.
The government has denied that Qatar is performing a “formal” role as a supplier of last resort. But sources familiar with shipments into the Isle of Grain terminal near London, and the QatarEnergy co-owned South Hook LNG terminal in Wales, believe there has been an increase in shipments since MsTruss visited the gulf state for talks in October.
The sources say these shipments are in addition to those agreed by contracts in place earlier in 2021.
This effort is aimed at reducing dependence on Norway and the US. “It avoids putting our eggs in too few baskets,” according to a source with knowledge of the Qatar talks.
Existing commercial relationships between Qatar and UK-based buyers, such as Centrica, make it easier for the government to encourage greater supply without saying that it has directly requested additional shipments, The Independent understands.
Mr Kwarteng is also understood to have been party to some discussions with Qatari counterparts in recent months.
A government spokesperson said: “Qatar continues to be a supplier of liquefied natural gas to UK buyers but is not a formal supplier of last resort and we have not requested or secured any additional shipments from the Qatari government.”
Britain’s gas supply remains “absolutely secure” with enough delivery capacity to meet demand, the spokesperson insisted.
Centrica declined to comment, while the government of Qatar did not respond to a request for comment.