Qatar closes helium plants amid Gulf rift

Sunday 18/06/2017
Shut until further notice. The logo of RasGas is seen on its building in Doha, Qatar. (Reuters)

Dubai - Qatar, the world’s second largest helium producer, has closed its two he­lium production plants because of the econom­ic boycott imposed by other Arab states, industry sources said.
The helium plants operated by RasGas, a subsidiary of state-owned Qatar Petroleum (QP), were shut af­ter Saudi Arabia closed its border with Qatar, blocking overland ex­ports of the gas, a QP official said. RasGas is 70% owned by QP and US giant Exxon Mobil has 30%.
Phil Kornbluth, head of US-based industry consultancy Kornbluth Helium Consulting, said his sources had confirmed the closure.
The closure of the plants is a sign of how the rift between Qatar and Arab powers could affect com­modities markets. Saudi Arabia, the United Arab Emirates, Egypt and Bahrain cut diplomatic and trans­port ties June 5, accusing Qatar of supporting terrorism, a charge Doha denies.
Qatar’s exports of liquefied natu­ral gas at Ras Laffan have been unaf­fected by the boycott.
The effects on the global helium market were expected to be de­layed, as consumers use up exist­ing stocks and work out alternative supply options. Shipping by sea di­rectly from Doha or through Oman would add complexity, risk and cost.
If the diplomatic dispute lasts more than a month, however, Ko­rnbluth predicted there would be a global shortage and the last time that happened, prices doubled.
“Helium is the single commodity that is affected most by this block­ade because it’s probably the only thing where Qatar is a major world producer and the supply has been completely cut off,” he said.
Helium is used to cool super­conducting magnets in medical magnetic resonance imaging (MRI) scanners, as a lifting gas in balloons and airships, as a gas to breathe in deep-sea diving and to keep satel­lite instruments cool. It is derived from natural gas during processing.
The two plants shut by Qatar have a combined annual production ca­pacity of approximately 2 billion standard cubic feet of liquid helium and can meet about 25% of total world demand for the gas, RasGas’s website stated.
Kornbluth said the helium plants shut down after filling all available shipping containers and storage tanks. He forecast the closure was costing RasGas revenue.
Helium, best known as a gas for filling party balloons and making the voice squeaky, is difficult to cap­ture and store. The United States is the biggest producer in what is a $4.7 billion industry, Mordor Intel­ligence said. Demand for the gas, driven particularly by Asia’s boom­ing manufacturing industry, is on the rise.
US reserves are dwindling due to the lack of helium production from its oil and gas fields, and the coun­try has already had to start import­ing helium from Qatar. Other he­lium-producing countries include Algeria, Russia, Canada and China, the US Geological Survey said.
Japan’s Iwatani, which supplies helium to China and South-East Asia, said it had a month’s supply in stock. A spokesman said it was con­sidering exporting on ships from a Qatari port or sourcing from the United States.
German industrial gases com­pany Linde said it was working on meeting customers’ requirements via helium sources in Australia, Al­geria and the United States.
Air Water, which imports from Qatar and sells in Japan, shifted its helium supply automatically to the United States, a spokesman said.
A source with direct knowledge of the matter said South Korea’s im­porters, which source one-third of their helium from Qatar, could suf­fer heavily.
“We might have an indirect im­pact if US helium prices go up,” the source said. (Reuters)