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(Bloomberg) — Asian buyers were closely monitoring a fraught liquefied natural gas market after Qatar announced that two trains at the world’s largest export hub could stay offline for as long as five years, tightening global supplies.
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Benchmark spot prices for the region were in the mid-$20 per million British thermal units range on Friday after surging on news of Iran’s attack on the Ras Laffan facility this week. QatarEnergy said it would have to declare force majeure on some long-term contracts.
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The price surge caused buyers to take a beat. Indian Oil Corp. on Thursday closed a tender without awarding a cargo for April delivery after the lowest price came in at $28/mmbtu. A Chinese buyer said it was laying low for the moment, as the country still has ample inventories.
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In South Korea, one of the countries that QatarEnergy said would be directly affected by the closed trains, a spokesperson for the industry ministry said alternative sources were available to cover for the lost Qatari cargoes, and they didn’t have any current supply issues.
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Still, “given the increased uncertainty, we plan to respond by closely monitoring supply, demand, and prices,” the spokesperson said.
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Traders won’t be able to stay out of the market forever, and high prices aren’t expected to go away anytime soon. An increasing number of importers have already started going to US fuel sellers — either producers or offtakers with long-term contracts — to secure supplies after the attack.
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The Qatari outages have flipped the market from an expected surplus to a 4% shortage this year, Morgan Stanley analysts including Devin McDermott said in a Thursday research note. The bank expects Asian benchmark prices to average $30/mmbtu for the rest of 2026.
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- The missile strikes on Ras Laffan Industrial City damaged QatarEnergy’s Trains 4 and 6, which represent a combined 12.8 million tons of annual production capacity
- “The impact is on China, South Korea, Italy and Belgium,” Chief Executive Officer Saad al-Kaabi said in the statement. “This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts.”
- For emerging nations — vital growth markets for LNG — a second gas calamity in four years will destroy industrial demand for the fuel, perhaps irreparably
- War in the Middle East is forcing Asia to turn to coal to plug the gaping hole emerging in its supply of liquefied natural gas
- Israel said it would avoid future attacks on Iran’s energy infrastructure, after a pair of strikes on key Middle East gas operations sent energy prices soaring
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Drivers:
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- A massive US natural gas export complex owned by QatarEnergy and Exxon Mobil Corp. is still in startup mode as the Iran war upends global supply, disappointing traders who were anticipating more progress at this stage
- China’s 30-day moving average for LNG imports on March 19 was 126k tons, 29% lower than a year ago, according to ship-tracking data
- European gas storage levels were ~29% full on March 18, compared with the five-year seasonal average of ~41%
- Europe’s 30-day moving average for LNG imports was 267k tons/day on March 19, 33% higher than the five-year seasonal average, according to ship-tracking data
- Estimated flows to all US export terminals were ~19.7 bcf/day on Mar. 19, down 1% w/w: BNEF
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—With assistance from Kathy Chen, Stephen Stapczynski, Sing Yee Ong and Soo-Hyang Choi.
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English (US)