QatarEnergy has declared an ongoing force majeure on liquefied natural gas (LNG) shipments to clients in Europe and Asia. This decision comes amid a significant slowdown in regular LNG transportation through the Strait of Hormuz, where activity remains largely obstructed. These developments are having profound implications for the global energy market, particularly as supply chains feel the strain of geopolitical tensions.
The Impact of Force Majeure on LNG Deliveries
Italian energy company Edison has reported that QatarEnergy will not be able to deliver an additional five LNG cargoes planned for the period between late September and early November. This setback brings the total number of cargoes affected under Edison’s contract since April to 29, translating to about 3.8 billion cubic meters of natural gas. Notably, Edison has managed to replace 21 of those cargoes, which amounts to roughly 2 billion cubic meters, allowing them to fulfill commitments to their customers despite the ongoing disruptions.
QatarEnergy has communicated to buyers in Pakistan that cancellations will persist into October, while imports to Bangladesh will continue to be impacted beyond September. European clients have begun receiving similar notifications, highlighting how widespread the repercussions of this force majeure are. Since its initial announcement in March, QatarEnergy has repeatedly extended this state due to the prolonged disruption—which has lasted longer than anticipated.
According to Anne-Sophie Corbeau, a researcher at Columbia University’s Center on Global Energy Policy, QatarEnergy’s month-to-month renewals of force majeure are driven by uncertainty regarding when normal operations can resume. She emphasizes that without a political resolution or a significant change in conditions, such disruptions could be prolonged.
Alternative Sources for Qatari LNG
The limitations on Qatari LNG have substantially decreased its presence in the global market. Data from ICIS indicate that Qatar exported only 18 cargoes in the first half of the year compared to 509 in the same timeframe the previous year, leading to an estimated loss of around $24 billion in gas sales. Other LNG-exporting nations have stepped up to bridge some of the gap created by these interruptions. The U.S. and Canada, in particular, have increased their exports, along with stronger output from Nigeria and Malaysia.
However, these alternative supplies have not fully compensated for the reductions. Many Asian markets have reduced their energy consumption or shifted to different fuels, while European countries are relying more heavily on stored gas rather than vying for high-priced spot market LNG. Corbeau warns that the protracted absence of Qatari and Emirati LNG could distort global trade patterns, potentially resulting in declines as severe as 2026, despite increasing production from other regions.
Diverse Impacts on Europe and Asia
The consequences of the LNG supply crisis vary widely across different importing nations. The European Union recorded lower LNG imports between April and August compared to the previous year. Similarly, Chinese imports have seen fluctuations, with certain months experiencing drops. Countries that are heavily dependent on Qatari or Emirati LNG, such as Pakistan, Bangladesh, and India, face heightened vulnerability as they struggle to secure alternative cargoes.
Japan seems to be in a better position, given its diverse portfolio of long-term contracts tied to oil and U.S. gas prices. Meanwhile, China has managed to navigate the loss of substantial Qatari LNG, and Europe has optimized its gas storage to cope with the diminished supplies, albeit at the cost of reduced stock levels.
The Path Forward and the Role of Hormuz
Before the current conflict, the Strait of Hormuz facilitated approximately one-fifth of global LNG trade. Although some oil tankers continue to navigate the waterway, LNG carriers are more specialized and harder to replace. Corbeau suggests that QatarEnergy anticipates restoring output from its 12 operational LNG production units within about two months once it is assured that the strait is safe. However, repairs to two other units damaged in attacks may take three to five years.
Limited movements of LNG resumed following a memorandum between the U.S. and Iran in June, though renewed hostilities jeopardized this brief period of recovery. Despite the initial uptick in exports from intact facilities, the consistent and safe passage through Hormuz remains crucial for Qatar’s energy operations. As Corbeau states, the critical question is ensuring the strait’s openness, a challenge that has proven difficult amidst ongoing tensions.