Qatar set to become world’s biggest buyer of US LNG
Once the world’s top producer, the Gulf nation will control largest share of US output by 2033
Qatar’s state-owned energy company is on track to become the world’s biggest buyer of US liquefied natural gas by early next decade, as war in the Middle East curtails the Gulf nation’s exports and pushes it to hunt for new sources of supply.
QatarEnergy signed two agreements in late October that increase the amount of US LNG it will have available to sell to its international customers by 7mn tonnes a year.
Combined with its share of production from the Golden Pass project in Texas, in which it holds a 70 per cent stake, QatarEnergy is on track to control 23.7mn tonnes per year from the US by 2033, making it the biggest US LNG buyer according to research firm Wood Mackenzie.
None of the LNG will end up in Qatar, where the cost of producing gas remains among the cheapest in the world. Instead, it will be resold and shipped to countries that buy liquefied gas from abroad to produce electricity and fuel industry, avoiding the Strait of Hormuz chokepoint.
The shift highlights the extent to which exports from the Gulf nation, once the world’s biggest supplier of LNG, have been affected by the US-Israeli war with Iran.
“The expansion of their global portfolio is part of an effort to address the perception that they were overly dependent on their system in Qatar, by building a sizeable supply portfolio outside of the Middle East,” said Jason Feer, global head of business intelligence at energy and shipping broker Poten & Partners.
This will help the firm rebuild its reputation as a reliable supplier that — prior to the war — had never missed a shipment, he said, adding that the company is likely to do two or three more deals in the US and possibly others elsewhere.
Qatari LNG exports have fallen to less than a third of their usual level this year, as Iranian attacks on shipping have sharply reduced the number of carriers passing through the strait — Qatar’s only route to customers outside the Gulf.
Shipments of LNG from the Middle East have been more affected than oil as there are no pipelines connecting export plants to ones outside the Gulf. It is also harder to transfer LNG than oil between ships, limiting the amount of liquefied gas that can be shuttled through the strait.
QatarEnergy stopped LNG production and declared force majeure to its affected buyers days after the outbreak of war at the end of February. Its main buyers — mostly in Asia — were left hunting around for alternative supplies.
The latest supply deals “strengthen our ability to serve customers across the globe”, said QatarEnergy chief executive Saad al-Kaabi at a signing ceremony on October 29.
The newly signed contracts will give QatarEnergy access to US LNG from 2030 and 2031 and will therefore do little to help its customers facing current supply disruptions in the Middle East. However, it could provide a buffer against potential disruption to Qatari exports in the future.
“The ability to market a geographically diverse supply portfolio alongside its own production will provide reassurance to QatarEnergy’s customer base,” said Wood Mackenzie.
Qatar was overtaken as the world’s biggest LNG supplier in 2023 by the US, which has made massive investments in export capacity. The Gulf nation has since faced the challenge of maintaining its influence in a market it once dominated.
One way it has sought to do so is by expanding its trading business. In 2020 QatarEnergy launched a trading desk, and last year it traded more than 20mn tonnes, according to Wood Mackenzie.
Buying LNG from the nation that usurped it also helps Qatar achieve its second main objective, which is to build a global gas business, said Feer.