Qatar Extends LNG Force Majeure Into November as Hormuz Chokes

Summary

• QatarEnergy has told Asian and European buyers LNG cancellations will run at least through November.
• The Strait of Hormuz handled roughly a fifth of global LNG supply last year.
• European and Asian gas prices sit near late-2022 highs heading into winter.

The latest

Qatar has pushed back its force majeure on liquefied natural gas cargoes by another month, keeping shipments to Asia and Europe suspended as traffic through the Strait of Hormuz stays disrupted, Bloomberg reported. State-owned QatarEnergy notified Pakistan and Bangladesh this week that cancellations would extend through November, according to people familiar with the matter. At least one Indian buyer received the same message.

Details

• The notifications: QatarEnergy informed Pakistani and Bangladeshi buyers this week that scheduled LNG deliveries would be canceled through November, according to people familiar with the matter cited by Bloomberg. At least one Indian buyer was told the measure would stay in force. The company has not publicly detailed the volumes involved.
• The European exposure: Italy's Edison SpA said its Qatari deliveries would remain suspended until early December, a longer window than the one given to Asian buyers. That leaves a major European utility without contracted Qatari supply through the opening weeks of the Northern Hemisphere heating season.
• The cadence: QatarEnergy has updated customers and canceled scheduled deliveries roughly once a month since the Iran war began, Bloomberg reported, making this the latest in a rolling series of extensions rather than a one-off. The company did not immediately respond to a request for comment.
• The flows: Qatar increased shipments through the waterway this month, but volumes remain far below pre-war levels, according to Bloomberg. The partial recovery has not been enough to restore contracted deliveries, and QatarEnergy has not indicated when normal loadings might resume.
• The chokepoint: The Strait of Hormuz handled about a fifth of global LNG supply last year, making the disruption a structural constraint on the seaborne gas market rather than a regional inconvenience. Bloomberg reported that a peace deal between the United States and Iran remains elusive.
• The damaged plant: Qatar has run its Ras Laffan LNG export facility at reduced capacity since it was attacked and damaged in March. The plant is being kept ready for a rapid increase in output if Hormuz reopens, Bloomberg reported, indicating the constraint is as much about transit as production.
• The price effect: The squeeze has pushed LNG prices in Europe and Asia to roughly their highest levels since late 2022, according to Bloomberg, threatening to raise utility bills through the winter. That period marked the peak of Europe's energy crunch after Russian pipeline flows collapsed.
• The buyers hit: The cancellations fall on price-sensitive importers. Pakistan and Bangladesh depend on Qatari long-term contracts for power generation, while India is among the largest Asian buyers. Replacing lost cargoes on the spot market means paying near four-year-high prices.

Background

Ras Laffan is Qatar's main LNG export complex and the loading point for nearly all of its seaborne gas. Every Qatari cargo bound for Asia or Europe must transit the Strait of Hormuz, leaving no alternative export route when the waterway is disrupted.

Between the lines

Keeping Ras Laffan ready for a rapid output increase, while still canceling cargoes month by month, points to a bottleneck at the strait rather than at the plant. The monthly renewal cadence also suggests Doha is not yet willing to write off the winter season, extending in short increments while US-Iran talks remain unresolved.

What's next

Whether QatarEnergy issues another extension covering December, when Edison's suspension is set to lapse, and whether shipment volumes through Hormuz keep recovering toward pre-war levels as the heating season peaks.

Source: Bloomberg