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Qatar Petroleum Says Plans Legal Action Against ADNOC

Source: Reuters 7/4/2017, Location: Middle East

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Qatar Petroleum said it planned to take legal action against Abu Dhabi National Oil Company (ADNOC) after the latter invoked a force majeure clause on condensate shipments, as a regional Gulf spat between the OPEC members risks spilling over to oil.

Small Gulf producer Qatar is locked in a diplomatic row with fellow OPEC powers Saudi Arabia and the United Arab Emirates (UAE), as well as Egypt and Bahrain, who severed diplomatic and transport ties with Doha, accusing it of supporting terrorism.

Qatar, the world's top seller of liquefied natural gas (LNG), denies the accusation. "ADNOC has called force majeure on the contract. We did not invoke force majeure. They have enforced it (force majeure) illegally and we are taking legal actions on that," Qatar Petroleum Chief Executive Saad al-Kaabi said in a news conference in Doha.

Under the sanctions imposed by the UAE and Saudi Arabia to isolate their smaller neighbour, the two allies have imposed a ban on ships and goods to and from Qatar. Qatar on Tuesday announced plans to raise liquefied natural gas (LNG) capacity by 30 percent.

Qatar Petroleum has a contract to send condensate, a very light crude oil which is a by-product of gas production, to ADNOC, by ships.

The Abu-Dhabi state run oil company said on Tuesday it will deal with two remaining contracted cargoes. "ADNOC has made arrangements to handle the two remaining cargos in question, and has communicated to Qatar Petroleum that no state of force majeure exists," an ADNOC spokesman told Reuters, adding that the condensate are delivered under one-year contracts that began in June 2016.

Qatar also delivers natural gas from its North Field to the UAE and Oman through the Dolphin pipeline, which has so far not been impacted by the rift. A shutdown of the Dolphin pipeline would cause major disruptions to the UAE's gas system. Kaabi said Qatar Petroleum will not shut the Dolphin pipeline, but if the crisis with Gulf states escalated Qatari authorities would have the right to do so.

"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," he said.

The four Arab states will meet to discuss whether to end the crisis or impose further sanctions on Qatar. The UAE Energy Minister Suhail bin Mohammed al-Mazroui said last month he does not foresee any shortage in fuel supply in the country, when asked about any impact of the embargo on Qatar on fuel supplies to the UAE.

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