- QatarEnergy declared force majeure on some long-term LNG supply contracts due to attacks
- Supply disruptions affect buyers in Italy, Belgium, South Korea, and China
- Damages to LNG facilities will take three to five years to repair, impacting global markets
State-owned energy major QatarEnergy on Tuesday declared force majeure on some of its long-term liquefied natural gas (LNG) supply contracts after supply disruptions linked to the escalating West Asia conflict impacted shipments, reported Reuters. This comes as attacks have reduced output of condensate, LPG.
The force majeure declaration affects several long-term buyers across key global markets, including customers in Italy, Belgium, South Korea and China, signalling the widening impact of the ongoing geopolitical crisis on global energy supplies.
Force majeure is typically declared when unforeseen circumstances prevent a company from fulfilling contractual obligations, and the move indicates that LNG supply disruptions have become severe enough to affect contractual deliveries.
QatarEnergy after the attack on its Ras Laffan Industrial City had said that the damages would cost about $20 billion a year in lost revenue. The company also added that it would take up to five years to repair, impacting supply to markets in Europe and Asia.
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His Excellency Mr. Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs, the President and CEO of QatarEnergy, in a statement had said “The damage sustained by the LNG facilities will take between three to five years to repair. The impact is on China, South Korea, Italy and Belgium. This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts."
The attacks on March 18 and March 19 damaged two liquefied natural gas (LNG) producing Trains 4 and 6 totaling 12.8 million tons per annum (MTPA) of production. According to the company this represented approximately 17% of Qatar's exports.
The company further added that Train 4 is a joint venture between QatarEnergy (66%) and ExxonMobil (34%), and Train 6 is a joint venture between QatarEnergy (70%) and ExxonMobil (30%).
The attacks also targeted the Pearl GTL (Gas-to-Liquids) facility, a production sharing agreement operated by Shell, that converts natural gas into high-quality cleaner burning drop-in fuels and produces base oils used to make premium engine oils and lubricants, and paraffins and waxes.
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