Qatar holds talks with US firms for LNG deals through 2031

Negotiations come after Qatar recently extended force majeure on deliveries to November.

What: QatarEnergy has begun discussions with a handful of suppliers as it seeks to procure supply to make up for lost volumes from Iran’s attack.

Why: Two liquefaction trains were damaged by Iranian attacks on the Ras Laffan Industrial Complex.

What Next: Initial estimates projected repairs could take three to five years, but Qatar’s quest for longer-term deals suggests damage could be more extensive.

QatarEnergy has opened talks with a couple of LNG producers as it seeks to procure US LNG in multi-year deals to substitute for supply that was taken off the market by Iran’s attack on its Ras Laffan Industrial Complex, Reuters reported on September 11 citing industry sources.

Talks are believed to have been held with the US’s two largest LNG producers Venture Global (NYSE: VG) and Cheniere Energy (NYSE: LNG) as well as Australia’s Woodside Energy (ASX: WDS), which is actively seeking offtake agreements for its Louisiana LNG project.

In 2025, Qatar was the world’s second largest exporter of the super-chilled fuel, trailing only the US.

However, the country finds itself in a scramble to replace supply that has been sidelined by Iran’s attack in mid-March on the Ras Laffan Industrial Complex that left two liquefaction units damaged.

Initial estimates forecast that repairs to Trains 4 and 6 could take three to five years to be completed and cost as much as $26bn.

However, with QatarEnergy now seeking multi-year deals through 2031, the belief is that repair time will be closer to five years than three. Concerns are mounting that it could even be longer than five years as damage done to the facility may have been underestimated.

With Trains 4 and 6 knocked out for repairs, it has taken 12.8mn tonnes per year (tpy) of LNG off the global market, equivalent to about 17% of QatarEnergy’s production capacity.

The shortage has left Qatar with no choice but to extend force majeure on deliveries to some customers until November. Italy’s Edison stated in late August that QatarEnergy had cancelled another five cargoes scheduled between late September and early November, extending the disruption to its supplies from early April into November. In total, 29 cargoes representing around 3.8bcm of gas have now been affected under Edison’s contract with QatarEnergy.

Meanwhile, among Asian buyers, QatarEnergy has extended force majeure through to mid-October on deliveries of LNG cargoes to countries such as Pakistan, which has struggled to find affordable cargoes on the spot market to replace QatarEnergy’s supply.

Pakistan’s most recent attempt to buy an emergency cargo fell through after traders sought a price that was three times higher than pre-war prices. Additionally, Bangladesh has also been affected by deliveries beyond September.

With Qatari LNG off the market, the loss of supply has pushed buyers into the spot market. Utilities in Bangladesh, India, South Korea and Taiwan are all seeking cargoes for delivery in October and November.

And with no path in sight to opening the Strait of Hormuz for commercial traffic, QatarEnergy could be forced to extend force majeure again as Washington and Tehran remain far apart on the conditions required for the strait to open.

Qatar appears to be caught off guard by the lengthy closure of the strait. After the US and Iran established a tentative ceasefire in mid-June, Qatar's Prime Minister Sheikh Mohammed bin Abdulrahman Al Thani said that QatarEnergy would return to normal LNG production within a few weeks.

However, this plan fell through following attacks in early July by Iran on vessels in the Strait of Hormuz causing QatarEnergy to extend force majeure notices. Although an encouraging sign occurred when a Qatari LNG tanker transited the Strait of Hormuz on September 8, the first time a Qatari vessel did so since July.  

According to Reuters, data compiled by Rapidan Energy reveals that a total of 25mn tonnes of LNG is available for purchase from US project currently being built.

Venture Global appears to be the most likely supplier, possessing 10mn tpy of uncontracted LNG. Meanwhile, Cheniere and Woodside have 6mn tpy and 3mn tpy available for offtake deals, respectively.

While QatarEnergy does hold key customers in Europe, such as Italy’s Edison and Eni (NYSE: E), as well as supermajors TotalEnergies (NYSE: TTE) and Shell (NYSE: SHEL), the majority of the gulf country’s LNG exports go to buyers in Asia.

Asian buyers have been grappling with sky-high prices on the spot market. Prices soared to their highest level in five months on September 1, as buyers searched for replacement cargoes amid continued disruption to Qatari supply.

It remains uncertain just how badly Trains 4 and 6 were damaged by Iran’s strikes and how long the Strait of Hormuz will remain closed. Amid so much uncertainty, Qatar’s move to buy US LNG should not come as a surprise, as the Gulf country seeks to convince its customers that it is still a reliable supplier of LNG supply despite external shocks.