QatarEnergy Secures Overseas LNG Deals to Mitigate Hormuz Strait Disruption Risks

QatarEnergy is strategically acquiring liquefied natural gas (LNG) from U.S. and other international producers to safeguard its revenue against potential disruptions to exports passing through the Strait of Hormuz. Minister of State for Energy Affairs and President and CEO of QatarEnergy, Saad bin Sherida Al Kaabi, revealed this strategy to Reuters on Thursday.

This approach will enable QatarEnergy to capitalize on price differentials between the U.S. and European gas markets, potentially offsetting financial losses that could arise from interrupted shipments. "In a scenario where you have a closure of the strait, which is the true contingency that we’re looking to have, you’d immediately see a spike in gas price and you’ll be able to generate revenue for QatarEnergy that otherwise wouldn’t be generated," Al Kaabi explained. He further elaborated on the potential for significant profits through arbitrage, stating, "You can imagine the arbitrage you can make, and that would make up some of the loss."

In line with this strategy, QatarEnergy has entered into a 20-year agreement to purchase three million tonnes of LNG annually from Woodside's U.S. facilities. This follows two agreements made last week with Cheniere Energy, securing up to four million tonnes per year from its Sabine Pass and Corpus Christi plants, with deliveries commencing in 2031 and extending through 2054. Al Kaabi indicated that more long-term supply deals are anticipated, with QatarEnergy expecting to finalize additional 20- to 25-year agreements by the end of 2026. The company's purchasing target exceeds the combined seven million tonnes per year from the Woodside and Cheniere deals, though a specific figure was not disclosed. QatarEnergy is actively negotiating with multiple suppliers, prioritizing those offering the most favorable commercial terms.

The decision to pursue overseas LNG purchases, rather than pipeline alternatives, was made approximately three months ago. Al Kaabi cited the vulnerability of pipelines and associated infrastructure, such as compression stations, to potential attacks. Instead, QatarEnergy will leverage its established LNG trading operations and a fleet of around 200 tankers to manage supply movements between markets. This method requires no additional capital expenditure and is considerably more cost-effective than constructing new pipelines or LNG production facilities.

QatarEnergy had previously halted LNG production in early March following Iranian missile attacks, declaring force majeure for affected customers on March 4. As a major global supplier, accounting for about one-fifth of worldwide LNG exports, all of which transit the Strait of Hormuz, the company experienced a significant impact on its revenue due to shipping disruptions. The planned overseas purchases are designed to provide an alternative revenue stream should such transit disruptions persist.