QatarEnergy Plans to Extend Force Majeure on Supplies: How This Will Affect the Global Market
23 July 12:53
QatarEnergy, a Qatari state-owned company and one of the world’s largest producers of liquefied natural gas, is preparing to extend its force majeure on LNG shipments until mid-October, which will prolong the supply crisis that has disrupted the global gas market amid the war in the Middle East.
Bloomberg reports this, as cited by "Komersant Ukrainian"
“Several buyers in Europe and Asia have separately stated that they expect an official announcement in the coming weeks,” the publication notes. — “Force majeure is declared when extraordinary circumstances prevent a company from fulfilling its contractual obligations,” the publication writes.
In June, Qatar informed some customers in Asia and Europe that it was canceling deliveries in August and September.
“If the force majeure is extended again, it will further complicate the situation on the global market, as Europe and Asia are competing for limited volumes of LNG, while the heat is driving up demand in some countries, and buyers are also stockpiling for the coming winter,” writes Bloomberg.
Before the conflict in the Middle East began, up to one-fifth of global LNG trade passed through the Strait of Hormuz.
“This move by Qatar was expected following the escalation of hostilities in the Middle East, which has dampened hopes that supplies from the region would resume anytime soon,” the publication states. — “This week, the U.S. and Iran downplayed the prospects for immediate peace talks, triggering a sharp rise in gas prices in both Europe and Asia.”
As previously reported, Qatar planned to increase LNG production by half just one month after the opening of the Strait of Hormuz, and by 80% two months later.
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Attacks on QatarEnergy Tankers
Earlier, in early July, the company reported that Qatar had suspended attempts to quickly resume production at the world’s largest natural gas liquefaction complex following an attack on one of its tankers in the Strait of Hormuz. QatarEnergy officials held a series of meetings following the July 7 attack, after which the company’s CEO, Saad Al-Kaabi, decided to halt plans to increase production at the Ras Laffan complex, according to sources familiar with the situation.
For security reasons, the complex will operate at minimum capacity, and the number of vessels scheduled to call at the facility in the coming days will be reduced.
This pause has become one of the most noticeable consequences of the new escalation around the Strait of Hormuz following attacks on a number of ships and U.S. strikes against Iran over two consecutive days.
The postponement of production ramp-up at Ras Laffan could further exacerbate the shortage in the global gas market and intensify competition between Asia and Europe for available LNG volumes ahead of the coming winter.
Spot prices for LNG in Asia are already more than 80% higher than pre-war levels. Last year, Qatar accounted for about one-fifth of global LNG supplies.
European benchmark gas prices have surged, exceeding 50 euros per megawatt-hour.
Earlier, in March, QatarEnergy declared force majeure on LNG shipments to the European Union and the Asia-Pacific region.
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