QatarEnergy has launched a long-term liquefied natural gas (LNG) purchase program from the United States and other producers to safeguard itself against potential gas export disruptions through the Strait of Hormuz. Saad bin Sherida Al-Kaabi, Minister of State for Energy Affairs and President and CEO of QatarEnergy, announced this on Thursday.
LNG Purchase Strategy
The new strategy allows QatarEnergy to purchase gas from foreign producers and sell it in markets where prices are higher. This move could offset some of the losses from disruptions in Qatar's own exports. Al-Kaabi stated: "If the Strait is closed, we will immediately see an increase in gas prices, and QatarEnergy will be able to generate revenue that would not have been realized otherwise."
New and Future Contracts
On Thursday, QatarEnergy signed a 20-year contract to purchase three million tons of liquefied natural gas annually from Woodside's facilities in the United States. This contract follows two other agreements with Cheniere Energy to purchase up to four million tons of gas from Sabine Pass and Corpus Christi facilities until 2054. Al-Kaabi expressed hope that additional new contracts would be signed by the end of 2026.
Al-Kaabi announced that QatarEnergy's purchase target is "much higher" than the total of seven million tons annually covered in recent agreements with Woodside and Cheniere. He also noted that negotiations with several suppliers are ongoing, and the company will purchase from any company that offers the best commercial terms.
The strategy for purchasing LNG from abroad was formed about three months ago, and QatarEnergy reached this decision after reviewing and rejecting pipeline options. Al-Kaabi explained this decision by stating: "As we have seen, pipelines and pumping stations or compression stations can also be targeted." For this reason, the company intends to rely on its LNG commercial operations and fleet of about 200 tankers to transport supplies between markets.
QatarEnergy halted LNG production in early March following Iranian missile attacks on Qatar and declared force majeure for affected buyers on March 4. Qatar supplies about one-fifth of the world's LNG exports, and all of these exports pass through the Strait of Hormuz. Al-Kaabi stated that the inability to send supplies has severely impacted revenue.
Planned purchases from abroad allow QatarEnergy to generate revenue in case disruptions in shipments through the Strait continue and to capitalize on price differences in markets through its commercial operations and transportation fleet.
