QatarEnergy has extended force majeure on a number of LNG shipments bound for Asia and Europe by another month, Bloomberg reported, as shipping disruptions through the Strait of Hormuz continue and part of the production facilities remains damaged. The company has informed Pakistan and Bangladesh that shipment cancellations will continue through next November, and has notified at least one Indian buyer that the measure will remain in place.
Italy’s Edison said its shipments would remain suspended until early next December and that QatarEnergy plans to cancel 6 additional shipments, bringing the total number of shipments not delivered to 35, after supplies were halted last April under a force majeure notice.
Gas prices approach highest levels since 2022
Disruptions in the Strait of Hormuz have pushed LNG prices in Europe and Asia close to their highest levels since late 2022, Bloomberg reported, while nearly 20% of global LNG supplies passed through the strait last year.
Oil and energy affairs expert Amer Al-Shobaki said Qatari supplies accounted for nearly one-fifth of the global market before the current disruptions, and that replacing these volumes over a short period would remain difficult because any new producer would need massive investments, liquefaction facilities and years of development before adding comparable capacity to the market.
Al-Shobaki said the decline in supplies was also affecting countries that do not directly import Qatari gas, as Asian buyers turn to other suppliers and compete with European buyers for available cargoes. He added that European gas prices had risen from levels hovering near 30 euros, or about 34 dollars, per megawatt-hour before the war began to more than 70 euros, or about 79 dollars, while Asian prices approached 26 dollars per million British thermal units, compared with about 13 dollars previously.
Oil and energy economist Mamdouh Salameh said the loss of a large portion of Qatari gas was increasing pressure on the European market as winter approached, at a time when Europe needed to build inventories while facing strong Asian competition for available spot volumes.
Exports continue at below-normal levels
Some Qatari exports have continued despite the extension of force majeure, with Qatar increasing the number of cargoes passing through the Strait of Hormuz during the current September. Shipping data showed gas carriers departing and some reaching Asian markets, alongside empty carriers returning to the Gulf.
The Ras Laffan facility in northern Qatar continues to operate below normal capacity after sustaining damage last March. Al-Shobaki said the departure of some carriers reflected Qatar’s ability to operate what remains available of its production and transport system, but did not mean it could guarantee a regular delivery schedule for all customers. This explained why some shipments were taking place alongside the extension of force majeure.
Earlier this month, Minister of State for Energy Affairs Saad bin Sherida Al-Kaabi said production had begun to return gradually and that Qatar was producing enough to meet electricity needs and those of some petrochemical industries, while exports continued at below-normal levels. He said restoring normal operating rates could take a few weeks if shipping conditions improved, and that a larger-scale resumption of operations at Ras Laffan could take place within weeks of the strait’s traffic returning to a more regular pattern, even as repairs to some damaged sections continued for a longer period.
Long-term contracts and expansion plans
Edison has a contract with QatarEnergy that began in 2009 and runs for 25 years to supply about 6.4 billion cubic metres a year to Italy, equivalent to about 10% of the country’s consumption. Al-Shobaki said long-term contracts gave importers greater visibility on future volumes and prices and helped producers plan multibillion-dollar investments in fields, liquefaction plants and carriers.
Salameh said the difficulty of replacing Qatari volumes exposed the limits of the spot market’s ability to cope with the absence of a major exporter, particularly when this coincided with rising LNG requirements in Europe and Asia. Both experts linked easing pressure to increased operable production at Ras Laffan and regular gas-carrier traffic through the Strait of Hormuz, allowing export schedules to be restored, competition for alternative cargoes to ease and rapid withdrawals from inventories during winter to be reduced.
Qatar aims to raise its domestic LNG production capacity from about 77 million tonnes a year to 142 million tonnes by 2030, adding about 65 million tonnes a year once the expansion projects are completed. QatarEnergy’s strategy also includes the Golden Pass project in the United States, along with investments and projects in several countries and continents, to diversify production locations, while Qatari facilities remain the backbone of the company’s export capacity.
