This is a good time to talk about energy security

There are three ways of gaining energy security: self-sufficiency, diversification and mutual interdependence.

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On Thursday, the liquefied natural gas carrier Al Mafyar, en route from Qatar to South Hook in Wales, changed its route from the Suez Canal to go around the Cape. On the same day, the Zarga, sailing west into the Gulf of Aden, turned around to go east. Most strikingly, on Wednesday, an LNG tanker from the US, chartered by Shell and heading for Kuwait, turned around to deliver to Dubai.

Energy markets have not yet been seriously upset by the embargo on Qatar by the UAE, Saudi Arabia, Egypt and several other countries, but some effects are visible. The voyages of Al Mafyar and the Zarga, reported by Kpler, a Paris-based ship-tracking service, have lengthened by five to 10 days. It is not clear why they diverted, as the Suez Canal is still open to ships sailing from Qatar, unless it was a precaution. UK gas prices jumped by 4 per cent on the news of the tanker detours.

With eyes on the usual hotspots such as Libya, Venezuela and the South China Sea, this is not the energy threat analysts were expecting, but the same principles apply.

There are three ways of gaining energy security: self-sufficiency, diversification and mutual interdependence. Shale resources have allowed the US to take some steps down the first path in recent years. Japan, with little fossil energy of its own and its nuclear power severely restricted since 2011’s Fukushima accident, sources LNG from many suppliers.

Europeans have since the 1970s sought to build a common gas market and to tie Russia into a reciprocal relationship, while boosting imports from Qatar and others. The supplier benefits, at least in theory, financially as well as from gaining a reputation as a reliable partner.

As major oil and gas exporters, the Arabian Gulf countries have not had to think much about their own energy security before. But over the past decade, the UAE and Oman started to buy gas via the Dolphin pipeline from Qatar and the UAE and Kuwait began importing LNG via tanker with Bahrain soon to follow. Energy also means water in these desalination-reliant countries.

Even though the world’s largest gasfield sits in the middle of the Gulf between Qatar and Iran, long-running political and commercial objections have prevented the development of a true regional gas grid. There is an electricity interconnection, whose main spine runs down from Kuwait through Saudi Arabia to the UAE, with side branches to Qatar and Bahrain and onwards to Oman.

This lack of gas pipelines explains the turn to LNG terminals, which can receive cargoes from anywhere in the world. If there is ever a good time for a crisis over the world’s largest LNG exporter, it is now. The market is oversupplied. Most importantly, US exports are growing, providing flexible supply not tied to a given destination.

It may be a long way from Louisiana but after a single LNG cargo from the US docked at Jebel Ali last year, three have come since the start of May. Last year, Dubai also purchased from Nigeria, Oman, Australia and others. The installation of Abu Dhabi’s first LNG import terminal at Ruwais last August looks like a timely move, while Sharjah’s import facility should start operations next year.

Beyond gas, the nuclear power plants in Abu Dhabi’s Western Region, due to start up shortly, and the growing use of solar power, also diversify supplies. Removing subsidies and improving efficiency reduces vulnerability across the whole economy.

The transformed Middle East political landscape poses novel threats to energy security – not just to far-off customers but to countries within the region. At the same time, developments in technology and markets are creating solutions. The shifting tanker routes are visible signs of an industry more robust to danger than a decade ago.

Robin M Mills is the chief executive of Qamar Energy and author of The Myth of the Oil Crisis.

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