We often learn more about hydrocarbon fundamentals when a deal collapses, rather than seeing actual completion. Centrica’s failure to lure Qatar into a twenty year £30bn LNG supply contract in return for an equity stake in the UK based company is one of those moments.
Doha was polite enough to give Centrica a consolation £2bn deal with Qatargas for 2.4m tonnes of LNG over three years, rather than 4m tonnes for 20 years that Sam Laidlaw preferred. Forget any of the small print involved, the reason for this is very clear: As far as the Qatari’s are concerned, the core market to stitch up is the Pacific basin (i.e. Asia). Atlantic Basin (Western) plays are little more than a tool to exact top prices in prime Asian markets. Tying up too much long-term gas in European hubs wouldn’t be a smart move; the Qatari’s are too canny for that. Centrica failed to grasp this underlying fundamental – which underpins why it only got LNG scraps from Doha’s table.
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