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The Galicia Spirit

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The Galicia Spirit

A recent attack on a ship carrying liquefied natural gas (LNG) from Qatar was likely an act of terrorism, not piracy, a marine security expert has told Doha News.

And though Qatar wasn’t the target, it could lose business if such attacks continue, the analyst added.

The Galicia Spirit, a Spanish-registered LNG tanker, was approached by a small boat off the coast of Yemen on Oct. 25.

LNG Carrier Galicia Spirit attack location


LNG Carrier Galicia Spirit attack location

Following an investigation, it was determined this week that the small boat was carrying a “substantial amount of explosives,” enough to cause significant damage to the Galicia, owner Teekay said.

“It appears, however, that when the skiff was approximately 20 meters from the vessel, the explosives detonated, destroying the skiff and ending the attack,” it added.

None of the crew onboard the Galicia were injured, and the vessel continued its journey without further incident, maritime security broker Asket said.

The Galicia was escorted away from the area by a navy ship from nearby Djibouti, AFP reported, citing a statement from Teekay.

‘Not piracy’

According to Asket’s managing director, the Galicia was likely not targeted because its LNG came from Qatar.

This was probably a coincidence, as the Gulf country is the world’s largest LNG producer, John Harris told Doha News.

Photo for illustrative purposes only.


Photo for illustrative purposes only.

However, he added “it is quite likely that the attack was not piracy motivated, but terrorist or paramilitary.”

Harris continued:

“Prestigious targets such as an LNG Carrier are generally out of the reach of pirates due to the speed and general structure of the vessel.

Also, the cargo is too complicated to store for long periods as it needs fuel to remain cool, and so ransom negotiations which can go on for many months, would be cost prohibitive for the pirates.”

He added that a “catastrophic explosion” is unlikely due to the extensive safety features of LNG carriers.

But an attack that damaged or destroyed one of these ships would be “spectacular, sending shock waves across the world.”

Losing business

And if such attacks become frequent, LNG vessels could be rerouted to avoid the Gulf of Aden and transit around Africa instead of using the Suez Canal.

Photo for illustrative purposes only.


Photo for illustrative purposes only.

This would mean that deliveries to Europe would take longer, cost more in fuel, and require more vessels to keep up supply.

It might also mean that countries could seek out new suppliers, potentially reducing Qatar’s exports, Harris added.

“Qatar and other nations will likely be looking at how to counter the threat or remove it by increasing patrols, and may be looking at vessels being protected in convoy or individually,” he told Doha News.


Photo for illustrative purposes only.


Photo for illustrative purposes only.

Qatar will likely collect far less money in the coming decade from the sale of natural gas, the main funding source of its rapid development in recent years, according to a recent forecast.

The prediction was made in a report published by the Columbia Center on Global Energy Policy (CGEP), and comes as Qatar continues to spend heavily on new roads, rail lines as well as power and desalination plants to meet the needs of its growing population and to prepare for the 2022 World Cup.

These public expenditures have largely been paid for with proceeds from natural resources sales, as Qatar has grown to be the world’s largest liquefied natural gas (LNG) supplier.

The CGEP says Qatar’s annual revenues from LNG sales totaled US$56.5 billion in 2013. However, it expects that new LNG development projects around the world, particularly in Australia and North America, will cause Qatar’s pricing power to decline and its revenues to take a hit.

Under one scenario put forward by the CGEP, Qatar’s LNG revenues could plunge 34 percent to $37 billion in 2026.


Photo for illustrative purposes only.

Aero Icarus/Flickr

Photo for illustrative purposes only.

Qatar has attempted to diversify its economy in recent years by attracting more tourists and positioning the country as a global aviation hub.

Additionally, the current construction boom is coming close to overshadowing the economic impact of the natural resources sector.

However, most of these projects are one-time initiatives that show no signs of being a sustainable, long-term source of wealth, a government report published in December concluded.

The country’s large financial reserves provide it with a significant buffer and the ability to continue spending despite lower revenues, although any income from natural resources would likely put more pressure on politicians to curb spending.

But the CGEP notes that Qatar’s massive natural gas reserves – estimated to be the third-largest in the world – give it the option to force some its competitors out of the market if it chooses to lift a long-standing moratorium on further development.

Pricing power

Qatar has historically used its strategic position between European and Asian markets to help it maximize its natural gas revenues.

CGEP said that Qatar has shifted sales to Europe during periods of low spot prices in Asia, and then toward Asia when demand pushed prices higher.

However, new supplies are threatening this model:

“The advancement of US shale opens the prospect that the United States and possibly other suppliers could compete with Qatar, undermining its ability to exercise pricing power. This could have profound implications for gas prices, gas pricing dynamics, and Qatar’s ability to influence prices. Rather than acting as a ‘discriminating monopolist,’ Qatar may become a price taker in Europe and Asia,” CGEP said.

Still, Qatar is likely to retain a major advantage over most of its competitors – many of whom are developing costly unconventional gas resources – and remain the lowest-cost supplies of LNG, CGEP says. This gives it additional options, the report’s authors say.


A ban on further development of Qatar’s North Field gas reserve has been in place since 2005. Government officials have given no indication when the moratorium may be lifted as they undertake technical studies to determine development strategies.

Qatar Gas

Qatar Gas

If Qatar were to lift the moratorium and announce plans to bring more gas to market, it could “intimidate competitors into deferring competing projects,” CGEP stated.

For his part, Qatar Energy Minister Mohammed bin Saleh Al-Sada said last year that the country’s energy strategy remains unchanged in the face of competition from US shale gas.

Speaking to the Telegraph, Al-Sada said the country has the flexibility and ability to respond to changes in the global gas market.

“Qatar’s role as an undisputed leader in the global energy market is set to remain for years to come.”


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