QatarEnergy’s Extended Suspension of Deliveries Through December Affects 3 Edison LNG Cargoes
Key Facts
Reuters reported on October 27 that QatarEnergy’s extension of its suspension of liquefied natural gas deliveries to Italy’s Edison through year-end will affect 3 additional cargoes allocated to the company. The new deadline follows Edison’s September 28 notice that the force majeure period would run through early December. The revised timeline keeps the disruption in effect as Europe enters winter, while the European gas infrastructure group said EU inventories were below their level a year earlier. Reuters reported that QatarEnergy customers in Pakistan had also been notified of an extension of force majeure through year-end, citing a person familiar with the matter. Edison said the extension would affect the 3 additional cargoes.
QatarEnergy began canceling deliveries to Edison in April, Reuters reported, because of disruptions caused by the war on Iran, which began in late February. The change announced in October does more than extend the deadline: it adds new cargoes to the disruption that has built up since spring. In its previous disclosure, Edison said a new notice covered 6 additional cargoes and extended the overall force majeure period from early April through early December. The deadline the company announced in September was therefore early December, before the latest extension to the end of the month. Reuters linked the delivery disruption to the war and damage to LNG facilities in Qatar.
As of September 28, the force majeure covered 35 LNG cargoes, with a total volume of about 4.6 billion cubic meters, according to Edison’s disclosure. The company said it had replaced 23 cargoes, equivalent to about 2.3 billion cubic meters, by that date. The figures show that the company had offset part of the affected volumes with alternative supplies, while other cargoes remained within the scope of the disruption. In its disclosure, Edison confirmed it could secure alternative gas for all its customers. It added that it could meet its existing and future commercial commitments, without implying that every original cargo had been delivered.
Edison has a long-term contract with QatarEnergy to supply 6.4 billion cubic meters of natural gas a year to Italy. The contract took effect in 2009 and has a total term of 25 years, according to company data. The contract’s scale places the affected cargoes within a broad annual supply relationship, while Edison’s reported replacement figures indicate how it is covering some of the disrupted volumes. Across the European market, data from the European gas infrastructure group showed EU inventories at 848.63 terawatt-hours, or 74.92% of capacity, on October 26. Inventories stood at 72% on October 1, about 11% below their level on the same date a year earlier, according to the group.
The European gas infrastructure group said low inventories and uncertainty over LNG availability were narrowing the room for maneuver during winter. It warned that a colder-than-expected winter, restricted LNG availability or supply disruptions could increase pressure on the system. In scenarios assessed by network operators, these conditions could require a demand response or leave some demand unmet. Edison’s extended deadline comes in this context, while the company said it could secure alternative gas for all its customers and meet its commercial commitments. The Edison statements cited here do not indicate a change in its stated position on securing those supplies.
Italy is due to receive specific economic data on October 30, according to the Italian statistics institute’s calendar. The preliminary estimate of third-quarter GDP is scheduled for 10 a.m., followed by preliminary October consumer price data at 11 a.m. The releases come after the extension to Edison’s cargo deadline, but cover different reference periods: the third quarter for GDP and October for consumer prices. The calendar specifies the release times and the type of estimate, without describing the effect of energy costs or supply disruptions on either indicator. The announced deadline for Edison’s cargoes remains the end of December, according to Reuters.