UK gas supply gets little LNG relief as cold bites stocks

By Daniel Fineren

DUBAI (Reuters) - Three big Qatari liquefied natural gas (LNG) deliveries should help replenish vital heating supplies for snow-covered Britain this week, but UK gas stocks remain uncomfortably tight with weeks of abnormally cold weather still to come.

A late blast of winter weather has drained Britain's already modest gas stocks to around a tenth of their capacity, sparking fears of supply restrictions with the cold weather forecast to continue into early April.

The first of a trio of tanker loads of super-cooled gas from the world's largest LNG exporter docked at the Isle of Grain terminal near London on Sunday, with a second due in Wales on Monday and a third on Friday, tracking data on Reuters shows.

The Qatari tankers could supply a total of around 430 million cubic metres (mcm) of gas to Britain over the next week, compared with daily gas demand of around 370 mcm, while another tanker has set sail from Trinidad on Saturday after UK gas prices leapt on Friday when a key supply link from Belgium shut unexpectedly for 8 hours.

"We get our supplies from a diverse range of sources and the market is proving to be highly responsive to the UK's needs," UK Energy Minister John Hayes said in statement on Sunday afternoon, pointing to the three LNG tanker deliveries.

"A shipment of liquefied natural gas arrived today and two more are due over the coming week," he said, adding that good supplies by pipeline from Europe and the UK's own North Sea platforms had allowed some replenishment of UK gas stocks over the weekend.

With little LNG coming to the UK over the last few months, and bitterly cold weather driving up heating demand, UK gas stocks have been drained to just 10 percent capacity.

A slight dip in demand over the weekend, when gas use by industry falls, helped replenish gas stocks by about 7 mcm from Saturday to around 453 mcm on Sunday, according to data from National Grid.

The arrival of a trio of large LNG tankers from the Gulf and the expected delivery around Apr. 3 of a rare cargo from Trinidad could allay some jitters over very low UK stocks.

But it may take sustained high UK wholesale gas prices to lure many more gas tankers away from consistently higher paying buyers in Asia to the UK.

The Trinidad delivery could add another 80 mcm of gas to UK supply in the first week of April, but there are mounting concerns that more will be needed to supplement supply from the North Sea if gas stocks dry up completely as winter drags on.

According to Reuters analysis of AIS data transmitted by the world's fleet of LNG tankers on Sunday, there were no other ships indicating that they are heading to Britain.

It is possible that tankers currently sailing to the Americas from African or Middle Eastern producers could be diverted to Britain to cash in on the surge in UK gas prices at the end of last week.

There is no sign of any more Qatari LNG ships heading to Britain in the Mediterranean.

Two vessels sailing from Qatar towards the Suez canal are not indicating their final destination, but even if they do head to Britain, the Al Hamla is at least 12 days sail away while the Al Areesh is 15 days away from boosting Britain's gas supplies.

But Britain also has an additional 358 mcm of gas - almost a day of its total gas needs - still held as LNG in storage tanks at UK import terminals.

The UK, a net gas exporter until 2004, has become increasingly dependent on imports as its own production from the North Sea has declined rapidly over the last decade.

In a bid to diversify supply sources, it built some of Europe's largest LNG terminals in the middle of the last decade.

Until last year the two terminals in Wales and an older facility near London were big contributors to Britain's gas supplies and helped boost north-west European supplies through a link to Belgium.

A temporary flood of LNG in 2009-10 led to some new UK gas storage projects being put on hold as apparently plentiful supplies of LNG, especially from Qatar, challenged the economics of stocking gas in summer for use in the winter.

But LNG's share of UK gas supplies has shrunk significantly over the last year, as competition for finite Qatari LNG has intensified from high paying buyers in Asia while new LNG consuming markets have absorbed supply from producers in the Atlantic basin.

Much of continental Europe still gets its gas on long-term contracts from Russia and Norway, but Britain's supplies depend on UK market prices being more attractive to foreign suppliers than other markets.

(Editing by Ron Popeski, Mark Potter and Theodore d'Afflisio)

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Assad forces take Aleppo village, reopening supply line

BEIRUT (Reuters) - Syrian President Bashar al-Assad's forces seized a village southeast of the city of Aleppo on Friday, reopening a supply line to the country's biggest city where they have been battling rebels for eight months, a monitoring group said.

The Syrian Observatory for Human Rights said the capture of Tel Shghaib marked the last step to creating a land supply route north into Aleppo from Hama province, crucial for Assad's forces who have lost control of part of the main north-south highway.

Rebels say they hold most of the city itself and nearly all the rural hinterland. But they have been unable to achieve a decisive victory and complain that they are outgunned and vulnerable to Assad's air force, artillery and ballistic missiles, which killed dozens of people in Aleppo last week.

The United States pledged direct but non-lethal aid to the rebels at a meeting in Rome on Thursday, disappointing Assad's opponents who had hoped for more tangible military support to tip the balance of forces on the ground.

Activists reported another day of fierce fighting around Aleppo, including the military airport at Nairab, three miles north of Tel Shghaib which Assad's forces retook.

"It's a significant gain for the regime," the British-based Observatory's director Rami Abdelrahman said of the army's push north, which reversed many rebel advances when they moved south into Hama from Aleppo province at the end of last year.

Further east, on the Iraqi frontier, government troops also managed to wrest back control of the Yarubiyah border crossing after insurgents seized it 24 hours earlier, he said.

SYRIA COULD FALL APART

The revolt against Assad, which erupted in March 2011 with mainly peaceful protests, has escalated into civil war between mainly Sunni Muslim forces and troops and militias loyal to Assad, from the minority Alawite community whose faith derives from Shi'ite Islam.

The United Nations says 70,000 people have been killed, nearly a million have fled the country and millions more have been displaced or need aid.

U.N. Secretary-General Ban Ki-moon said on Friday that Syria, a major Arab state on the fault lines of broader Middle East conflict, would fall apart if the government and rebels keep fighting instead of seeking a negotiated peace.

"This is a very small window of opportunity which we strongly support and encourage them to use that. The opportunity may close soon," Ban said in Geneva.

The government and opposition have both edged away in recent weeks from their previous rejection of dialogue. Foreign Minister Walid al-Moualem said on Monday the government would even talk to armed rebels and opposition coalition leader Moaz Alkhatib has said he is ready to meet Assad's representatives.

But Syrian officials say any serious talks must be on Syrian soil under state control, and have shown no readiness to discuss Assad's departure - the central demand of the opposition. For rebel fighters, who do not answer to exiled civilian opposition leaders, Assad's exit is a precondition for any negotiations.

"I continue to urge the Syrian parties to find their way to the negotiating table. The horrors of the last months and years prove beyond doubt: the military solution in Syria is leading to the dissolution of Syria," Ban said.

He also called on the U.N. Security Council, paralyzed by a standoff between the United States and European allies on one side, pushing for U.N. action against Assad, and Russia and China, who have backed Assad, to unite and address the crisis.

Moscow criticized Thursday's meeting in Rome of largely anti-Assad Western and Arab states for taking positions and steps which "directly encourage extremists" to topple the government by force.

But the Kremlin also said presidents Vladimir Putin and Barack Obama had told their foreign ministers to keep in close touch and seek new initiatives to end Syria's civil war.

U.S. Secretary of State John Kerry said on Thursday Washington would provide non-lethal aid including medical supplies and food to rebel fighters, as well as $60 million to help the civilian opposition provide services including security, education and sanitation.

The European Union said it had amended sanctions on Syria to allow the supply of armored vehicles, non-lethal military equipment and technical aid.

The steps still fell well short of what rebels are looking for - more arms, and prompted the opposition to postpone a Saturday meeting where they had been due to choose a prime minister to head the administration of rebel-held territory.

Alkhatib said he was tired of hearing Western concerns over the growing role of Islamists in the Syrian rebel ranks - one of the main obstacles to greater military support, saying it paled into insignificance alongside the prolonged civilian suffering.

"Many sides...focus (more) on the length of the rebel fighter's beard than they do on the blood of the children being killed," he said, standing next to Kerry after their meeting.

(Additional reporting by Stephanie Nebehay in Geneva and Alissa de Carbonnel in Moscow; Editing by Mark Heinrich)

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