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Feb 02 2012

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* Qatar Drawing Up LNG Contingency Plan For Hormuz Closure- Source

Qatar Drawing Up LNG Contingency Plan For Hormuz Closure- Source

DOHA (Zawya Dow Jones)-Qatar, the world's largest exporter of liquefied natural gas, is drawing up a contingency plan to close down its vast LNG facilities in an emergency, if Iran carries out recent threats to close the strategic Strait of Hormuz, a senior oil official in the emirate said Thursday.

The plan involves examining what would be required if Qatar had to perform a complete and rapid shutdown of the country's 14 liquefaction plants in the northern industrial zone of Ras Laffan, said the official, who requested anonymity.

Qatar has no alternative export routes for its LNG in the event of a blockade of the Strait of Hormuz, through which one-fifth of the world's traded crude passes.

"If you can't export, you have to shut down," the official said. "Shutting down a lot of facilities is not easy."

State-owned RasGas and Qatargas already operate a rolling program of maintenance shutdowns at their 14 liquefaction plants, but they have never had to shut down all the facilities at the same time.

A spokesperson for RasGas declined to comment. Qatargas couldn't be reached for comment.

Specially designed tankers carry around 77 million tons of LNG per year from Qatar through the Strait of Hormuz to customers in Asia, Europe and the U.S.

In recent weeks, Iranian officials have stepped up threats to close the Strait of Hormuz as the U.S. and Europe have toughened sanctions against Iran to pressure it to rein in its nuclear program. The U.S. has vowed to keep the strategic waterway open, and some view the Iranian threats as bluster.

Nevertheless, the International Monetary Fund said earlier this week that the Hormuz threat was one of the risks facing Qatar's economic outlook in 2012.

"The main downside risks are lower hydrocarbon prices and potential disruption in transportation of liquefied natural gas (LNG) due to increased geopolitical tensions," the IMF said.

Ballooning revenues from LNG sales have made Qatar into the one of the richest nations in the world, propeling it to nearly 20% economic growth last year.

Japan, South Korea, India and China are the major purchasers of Qatari LNG.

Some Persian Gulf states have alternative exports routes for their oil and gas in the event of a disruption to traffic through Hormuz. Saudi Arabia has an oil export pipeline that runs to the Red Sea, and the United Arab Emirates is building a pipeline from Abu Dhabi to Fujairah, which lies outside the Hormuz Strait.

All Qatar's LNG is shipped through Hormuz, though it exports some natural gas to the United Arab Emirates via a 364-kilometer pipeline.

-By Alex Delmar-Morgan, Dow Jones Newswires; +974 6659 9818; alex.delmar-morgan@dowjones.com

Copyright (c) 2012 Dow Jones & Co.

(END) Dow Jones Newswires

02-02-12 1606GMT