QatarEnergy is negotiating with several producers to secure multi-year U.S. liquefied natural gas contracts through 2031 to replace capacity knocked out by Iranian attacks that will take years to repair, three trading and industry sources said.
Discussions include with Venture Global, Cheniere and Woodside, two of the sources said.
The contract talks are part of the company’s efforts to replace lost volumes from its Ras Laffan facility after two of its 14 LNG trains and a gas-to-liquids (GTL) facility were damaged by Iranian strikes in March, the sources said. The discussions also mark a shift from QatarEnergy’s purchases of dozens of U.S. spot LNG cargoes to help meet commitments to some of its Asian clients, suggesting it is now seeking longer-term solutions to cover the shortfall.
QatarEnergy CEO Saad al-Kaabi said in March that the repairs would sideline 12.8 million tons per year of LNG capacity for three to five years.
Having halted production in March, QatarEnergy has renewed force majeure notices monthly, most recently extending them to November, with further extensions possible as the Strait of Hormuz remains closed, the sources said.
QatarEnergy Trading, the trading arm of QatarEnergy that managed 10 million tons of the company’s LNG portfolio, is seeking 2-3 million metric tons per annum through to 2031, one of the sources said.
“They will have to buy whatever they can get their hands on,” a fourth source said.
QatarEnergy did not respond to a Reuters request for immediate comment. Venture Global and Cheniere declined to comment, while Woodside LNG said it does not comment on market speculation.
U.S. projects under construction have a total of 25 million metric tons of LNG available for purchase, according to data compiled by research firm Rapidan Energy.
Venture Global has the most LNG available with 10 mtpa uncontracted, with both Cheniere and Woodside Energy’s having 6 mtpa also available for sale and 3 mtpa available from Sempra’s Port Arthur LNG project, the Rapidan data shows.
“Qatar’s current pursuit of long-term LNG volumes from other producers to help Qatar deliver into their customer contracts indicates that Qatar now sees risk to their ability to export LNG for several years,” said Saul Kavonic, head of energy research and advisory at MST Marquee.
“It signals that Qatar considers the disruption of the Strait of Hormuz may prove longer lasting, and the damage to Qatari LNG infrastructure has been more extensive and may take longer to repair than initially hoped,” he added.
About 80% of Qatar’s LNG shipments are typically exported to buyers in Asia.
With uncertainty about when flows would resume through the major waterway, many clients in Asia started to seek alternatives to Qatari LNG.
Some market participants are stress-testing scenarios in which no Qatari gas is available, according to a fifth source.
(Reporting by Marwa Rashad in London, Curtis Williams in Houston. Additional reporting by Aizhu Chen and Emily Chow in Singapore; Editing by Nina Chestney, Veronica Brown and Susan Fenton)