The UK’s South Hook LNG terminal, located at Milford Haven in southwest Wales, won’t be used to supply gas to Europe because pipeline transit costs would make it uneconomical, Alaa AbuJubara, marketing director of terminal developer Qatargas, said.

Speaking on the fringes of the Flame gas conference in Amsterdam, AbuJubara said LNG imported into the terminal will be sold on the UK market.
Qatargas will also deliver LNG direct into terminals in Belgium, France and the Netherlands, and as well as US and Asian markets, Jubara said.
Jubara said he didn’t believe the South Hook terminal, which is scheduled to be completed late in 2007 and will have the capacity to import up to 20 per cent of UK gas demand a year, will lead to an oversupply of gas.
“We have done lots of studies and we don’t feel there is going to be an oversupply,” he said, adding that the LNG will be needed in the near future to make up for declining domestic gas production.
If there should be an oversupply in the short term, Jubara said Qatargas will have another terminal in the US, as well as access to terminals in Europe and Asia, so will have many options to exercise.
Jubara said Qatargas and its partners at western oil companies are looking at new ways of going further downstream in the gas business, but wouldn’t say if it has plans to retail gas directly to consumers in the UK or European markets.
Phase one of the South Hook terminal construction is due to finish in the last quarter of 2007 and will have the capacity to import seven million tonnes of LNG a year.