Qatar's decision to shut down the world's largest liquefied natural gas (LNG) facility following Iranian air strikes could have a far-reaching impact for top buyers.
State-run QatarEnergy on Monday confirmed it had “ceased production” because of Iranian attacks on its facilities. The decision was expected to have significant implications because Qatar accounts for roughly 20 per cent of the world's LNG supply.
The decision led to a sharp price in gas prices, with European whole gas prices increasing by 52 per cent. It was the largest jump in gas prices since Russia's invasion of Ukraine in 2022.
There are also questions for some of the biggest buyers of Qatar's LNG, such as India which imported roughly 11.3 million tonnes of the product from Doha in 2024, according to World Bank data.
Separate data from the US Energy Information Administration (EIA) said that, in addition to India, other top buyers for Qatar's LNG are China and South Korea.
“The big buyers are in Asia. The big buyers are either going to buy from somebody else and drive the price up, or they're not going to buy it all,” said Ira Joseph, global fellow at the Centre on Global Energy Policy.
global fellow at the Centre on Global Energy Policy
A prolonged disruption of LNG exports could force India's clients to import the product off the spot market. This could lead to an increase in prices considering the limited spare liquefaction capacity of exporters like the US and Australia.
Already the world's largest LNG exporter, US exports of liquefied natural gas rose 17 per cent last month, Reuters reported citing LSEG data.
“Buyers that have been shunning Russian LNG cargoes may now be enticed to buy them despite US and European sanctions risk,” said Matthew Bey, senior global analyst at RANE.
QatarEnergy's decision to halt LNG production also comes amid of a potential disruption of crude and oil product through the Strait of Hormuz, a critical chokepoint through in the supply chain for the world's energy consumption. According to an S&P Global Energy analysis, roughly one-fifth of global LNG supply passes through the strait.
Threats in the Strait of Hormuz present a dual problem for exporters such as Adnoc, which has not shut down LNG operations.
“We have seen Iranian attacks on Emirati oil and gas infrastructure and Adnoc cargoes are also subject to transit disruptions or delays through the Strait of Hormuz,” said Mr Bey.
Qatar's decision to halt LNG production could also lead to a critical hit for its economy, which is heavily reliant on gas. The Gulf nation has ambitious plans to more than double its LNG production from 77 million tonnes to 160 million tonnes by 2030.
“It's an extreme shock. It's not the whole economy, but a big chunk of it is tied into oil gas and condensate production,” Mr Joseph said.
“It just doesn't shut the gas production. It shuts off the condensate production too, which is a massive revenue generated for the economy. So it's a big deal.”
A recent staff report from the International Monetary Fund gave partial credit to Qatar's significant expansion of LNG production over the medium turn to its economy's resiliency amid geopolitical challenges. The fund forecast Qatar's economy to grow by 3 per cent through the third quarter this year before averaging at roughly 4 per cent in the medium term.
Jennifer Gnana contributed to this report from Abu Dhabi
