Qatar will expand liquified natural gas storage facility in South Wales

The Gulf state of Qatar is to invest millions of dollars in expanding a liquified natural gas, or LNG, terminal at Milford Haven in South Wales to cope with increasing demand amid the global fuel crisis.

The two most significant global players in the LNG industry are Qatar and the United States, and at the same time as a new $10 billion Golden Pass terminal is being developed in Texas, state energy company QatarEnergy and its US partner ExxonMobil are increasing the capacity of the Welsh facility which was completed in 2009.

It is hoped the Milford Haven expansion will allow for its LNG capacity to increase by around 25 percent, as countries around the world continue to look for alternative energy supply sources amid the ongoing conflict in Ukraine.

The Doha News website reports that even before the conflict began, in 2021 around 17 percent of the United Kingdom's gas came from Qatar, the world's biggest LNG exporter, and despite government statements criticizing fossil fuel production, that demand has grown in recent years.

The Milford Haven site, known as South Hook, is one of Europe's largest LNG terminals. It currently has an annual capacity of 15.6 million tons of LNG, and The Daily Telegraph newspaper reports that the aim is to get capacity up to closer to 20 million tons by the middle of 2025.

At the start of the Ukraine conflict, the Guardian newspaper reported that Qatar had existing long-term contracts for most of its exports to be sold to Asian markets, but there was believed to be "some flexibility" about these arrangements.

In addition to its own requirements, Britain has become a so-called gas bridge to Europe, only serving to heighten the importance of the Milford Haven facility.

Germany, which is Europe's biggest gas market, has no LNG import terminals whatsoever, and although imports to Europe could be stepped up significantly, it is thought that challenges including the lack of infrastructure could take up to a decade to overcome.

Brexit has also placed further obstacles in the way but earlier this week the German government expressed a willingness to cooperate with the UK over energy supplies.

Unseasonably mild weather recently has shielded the continent from the full impact of reduced fuel supplies, but there has been much discussion about contingency plans for possible power problems in the new year, and there are longer-term challenges as supplies from Russia remain shrouded in uncertainty.

"I think everyone's now thinking about what's going to happen next year," Graham Freedman, principal analyst for European gas at global consultancy Wood Mackenzie, told the Telegraph. "It's a question of will there be enough to meet demand and fill up storage."