Qatar is pausing efforts to rapidly revive production at the world's largest liquefied natural gas facility after an attack on one of its tankers in the Strait of Hormuz raised fears that transit through the crucial waterway is still too risky.
QatarEnergy officials held a series of meetings following the attack on Tuesday, with Chief Executive Officer Saad Al-Kaabi deciding to cease plans to increase output at the Ras Laffan complex, according to people familiar with the matter. Operations will be kept at a minimum for safety reasons and the number of vessels scheduled to dock at the plant in the coming days will be reduced, some of the people said, asking not to be identified because of the sensitivity of the issue.
The pause is one of the most high-profile fallouts of the heightened tensions this week with attacks on a number of ships near Hormuz and the US striking Iran for two consecutive days. President Donald Trump on Wednesday even raised the prospect of a return to all-out war, a worst-case scenario for energy producers in the region who were gradually recovering from the impact of the conflict.
QatarEnergy didn't immediately respond to a request for comment.
Pushing back Ras Laffan's ramp-up threatens to further tighten the global gas market, risking more intense competition between Asia and Europe for spare supply as they restock for the coming winter. Asian LNG spot prices are more than 80% higher than pre-war levels, highlighting anxiety surrounding the restart of Qatar — which supplied about a fifth of the world's LNG last year.
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Since the US and Iran signed an interim peace deal in June, Qatar had been pushing ahead with plans to revive most of its LNG production within two months. It has been running some of Ras Laffan's production trains at reduced capacity to be ready for a quickly ramp-up when the time was right, some of the people said. That's likely to continue as the company still aims to boost exports as fast as possible following the safe opening of Hormuz, they said.
Photo Credit: Bloomberg
Qatar had increased loadings and brought back empty tankers to take on more fuel, the people said. Eleven empty LNG vessels are currently sitting outside Ras Laffan, according to ship-tracking data.
Those efforts will now be temporarily paused as the world's second-largest LNG exporter waits for tensions to ease, the people said.
The giant facility had been largely shut since early March after an Iranian drone attack, and about 17% of the plant's production capacity was damaged in a separate missile strike weeks later. Repairs to that part of the project is estimated to take at least three years.
Last week, QatarEnergy extended force majeure notices on LNG supply for some of its Asian customers to August, causing some uncertainty in the market about when the company would restart production, Bloomberg reported. In Europe, Italian utility Edison SpA said the clause will now be in place until early September for its imports.
The confusion about Qatar's timelines heightened further after the country said its Al Rekayyat LNG tanker was struck by Iran on Tuesday. The ship was disabled, with the crew abandoning it shortly after, Bloomberg reported. This was the first time a Qatari LNG tanker was targeted since the war in Iran began in late February.
Two other vessels were also attacked, and Iran has fired projectiles on some Gulf countries as it came under attack from the US this week. The tensions brought maritime traffic through the Strait of Hormuz to a near standstill on Thursday.
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