Qatar, Once an LNG Seller, Buys U.S. LNG as Hormuz Is Blocked

QatarEnergy to Buy 7 Million Tons of U.S. LNG Annually

As the blockade of the Strait of Hormuz drags on, Qatar, one of the world's largest exporters of liquefied natural gas (LNG), has emerged as the biggest corporate buyer of U.S. LNG. With disruptions to exports of domestically produced LNG, the country is seeking to secure supplies produced overseas and diversify its supply chain.

According to Bloomberg on Thursday (local time), QatarEnergy, Qatar's state-owned energy company, has agreed to buy 3 million tons of LNG annually from a production project that Australian energy company Woodside is developing in Louisiana. The volumes are scheduled to be supplied for 20 years starting in 2030.

QatarEnergy's liquefied natural gas (LNG) production facility in Ras Laffan Industrial City, Qatar. Reuters-Yonhap.

Last week, QatarEnergy also signed a long-term LNG purchase agreement with U.S. energy company Cheniere Energy for 4 million tons annually. The agreements will secure a total of 7 million tons of U.S. LNG per year. Saad Sherida Al-Kaabi, Qatar's Minister of State for Energy Affairs and QatarEnergy CEO, said, "With these additional volumes, QatarEnergy has become the largest corporate buyer of U.S. LNG," adding that they would "support our long-term growth and supply chain diversification strategy."

Qatar, a global LNG exporter, appears to be expanding its purchases of U.S. LNG because the war in the Middle East has disrupted both domestic production and exports. In the early days of the war with Iran, two liquefaction trains at Ras Laffan, Qatar's key LNG production hub, were damaged. Shipping disruptions, including the blockade of the Strait of Hormuz, have also sharply reduced LNG exports.

Bloomberg reported that the strategy is aimed at mitigating risk by supplying international markets with volumes produced in third countries, even if exports of domestically produced gas are blocked. If international gas prices surge because of shipping disruptions, such as a blockade of the Strait of Hormuz, QatarEnergy could sell LNG secured overseas to earn additional revenue and partly offset losses from reduced exports of domestically produced LNG.

In an interview with Reuters on Friday, Al-Kaabi said, "If the real emergency we are preparing for occurs, gas prices will surge immediately." He added, "In that case, QatarEnergy could generate additional revenue that it would not normally earn and protect the country from losses."

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