Armageddon scenario for gas markets as Qatar hit by missile strikes
The CEO of Qatar Gas reported losses of $20 billion caused by damage to a facility built just two years ago at a cost of $26 billion. This damage is likely to reduce liquefied natural gas (LNG) output by 12.8 million tonnes per year for three to five years, about 17% of Qatar’s LNG exports. The country may declare force majeure on long-term LNG supply contracts with Italy, Belgium, South Korea, and China.
The Ras Laffan plant, supplying about one fifth of the world’s LNG, was developed over more than three decades with investments totaling hundreds of billions of dollars. Military actions causing current disruptions must cease for production to resume.
The losses will affect not only the gas sector but also reduce LNG exports by 23%, oil by 8%, and helium by 3%, leading to an overall export decrease of approximately 24%, significantly impacting global energy markets and supply chains.
Qatar Gas is the world’s largest LNG producer and exporter, playing a critical role in meeting global energy demands, especially as gas gains prominence as a cleaner fuel source. Its facilities represent a major share of the LNG market.
The situation at Qatar Gas may persist for years, with serious consequences for global energy and trade flows. Ceasing military actions and restoring production are vital for market stabilization.
Declaring force majeure on long-term contracts and the ensuing export cuts could drive global gas prices higher and reshape market dynamics.
