Qatar has determined that a force majeure declaration is necessary for long-term LNG supply contracts with countries including South Korea, following strikes on its major liquefied natural gas facilities in the Iran war, Reuters reported Thursday.
QatarEnergy (QE), the state-owned energy company, has decided that a force majeure declaration is needed for long-term LNG supply contracts with South Korea, China, Italy and Belgium, saying it would be difficult to fulfill its contractual supply obligations, according to the report. However, Reuters added that the company has not yet made an actual declaration.
Earlier on the 19th, QE CEO Saad al-Kaabi warned in an interview with Reuters that "we may have to declare force majeure for up to five years on long-term LNG supply contracts destined for South Korea, China, Italy and Belgium." He added that "the strikes damaged 17% of the company's LNG export capacity, and it will take three to five years to restore."
According to QE, Iran's attack directly damaged two of the company's 14 LNG production trains and one of its two gas-to-liquids (GTL) facilities. The resulting reduction in LNG output is expected to reach 12.8 million tons per year.
South Korea is one of the largest importers of Qatari LNG, bringing in 9 million to 10 million tons annually. Korea Gas Corporation (KOGAS) explained that Qatar dependence has fallen below 20% thanks to significant diversification of LNG supply chains, with substantially increased volumes from the United States and Australia. KOGAS said it currently holds inventory levels exceeding mandatory reserve requirements and has sufficient capacity to respond to supply crises through the end of the year. "We are reviewing phased emergency supply-demand response measures and preparing for a prolonged situation in cooperation with the government and related agencies," a KOGAS official said. However, if Qatar's force majeure situation is prolonged, the shortfall during that period would largely need to be covered through the spot market, where prices are higher than long-term contracts, affecting gas bills for households as well as industry.
Beyond LNG, Qatar's exports of byproducts including condensate (down 24%), LPG (down 13%) and helium (down 14%) are also expected to decline in a chain reaction, raising concerns about supply disruptions across the global petrochemical and advanced technology sectors.
The strikes came after Israel bombed South Pars, Iran's largest gas field, and a natural gas refining complex in Asaluyeh on Iran's southwestern coast, prompting Iran to retaliate immediately. Iran's attack caused fires at critical national gas facilities in the Ras Laffan area on Qatar's northern coast, Qatar's Ministry of Interior announced. Ras Laffan is a major LNG production and export hub accounting for approximately 20% of global LNG supply.
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