Qatar Says Fellow OPEC State U.A.E. Halts Oil Imports in Row

Qatar Petroleum is taking “legal actions” after Abu Dhabi National Oil Co.declared force majeure to halt shipments of condensate, a light oil liquid, from Qatar, according to QP Chief Executive Officer Saad Sherida Al Kaabi.

Qatar will continue to supply natural gas via pipeline to the United Arab Emirates and Oman, Al Kaabi told reporters at a press conference in Doha Tuesday. Al Kaabi said the force majeure declaration was imposed “illegally” on the condensate shipments. Adnoc wasn’t available to comment.

“I don’t know how they can call force majeure. We are the ones who should be calling force majeure because we have the restrictions, not them,” Al Kaabi said. “They have enforced force majeure on that contract illegally in our view and we are taking legal actions on that.”

The U.A.E., of which Abu Dhabi is the capital, joined a Saudi-led campaign to boycott their smaller neighbor Qatar in June. The U.A.E., Saudi Arabia and Egypt accuse Qatar of supporting and funding terrorist groups and gave the country until Wednesday to cut those ties. Qatar denied the accusations. The U.A.E. and Qatar are both members of the Organization of Petroleum Exporting Countries.

The U.A.E. imports condensate by ship and last month banned deliveries of any goods from Qatar by sea. Al Kaabi didn’t say whether the condensate shipments had already stopped. Force majeure is a legal status protecting a party from liability if it can’t fulfill a contract for reasons beyond its control.

Qatar Petroleum has the right to declare force majeure and stop gas supplies, but hasn’t taken that option because it would hurt people in the U.A.E., Al Kaabi said. “If there is an additional escalation I can’t say we would never stop the gas. This would be a decision not just for Qatar Petroleum but also a sovereign issue and will depend on the situation in the country.”

Adnoc, Abu Dhabi’s government-owned oil producer and refiner, first agreed in 2014 to buy Qatari condensate. Emirates National Oil Co., the refiner in neighboring Dubai, signed a similar deal to buy the Qatari fuel in an effort to diversify supplies from its main seller, Iran. ENOC offered last month to sell its cargoes of Qatari condensate loading in June and July instead of taking delivery. It operates a 120,000 barrel-a-day condensate refinery at Jebel Ali in Dubai.

Adnoc has two condensate units at its Ruwais refinery. The units, known as splitters, can each process 140,000 barrels a day of the fuel to produce naphtha, kerosene and gas oil that can be further refined into transport fuels such as gasoline and diesel.

www.bloomberg.com

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