QatarEnergy plans overseas LNG purchases to guard against Hormuz disruptions, Reuters reports

The strategy would allow the QatarEnergy to capitalise on price differences between US and European gas markets, potentially offsetting losses from interrupted shipments.QatarEnergy is buying long-term supplies of liquefied natural gas (LNG) from the U.S. and other producers as part of its strategy to protect its revenue against future disruptions to exports through the Hormuz, Minister of State for Energy Affairs and President and CEO of QatarEnergy Saad bin Sherida Al Kaabi told Reuters on Thursday.The strategy would allow QatarEnergy to buy gas from overseas producers and sell it in markets where prices are higher, potentially offsetting some of the losses if Qatar’s own exports are interrupted.“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 said.Referring to profits from price differences between U.S. and European gas markets, Al Kaabi added, “You can imagine the arbitrage you can make, and that would make up some of the loss.”More long-term supply deals plannedQatarEnergy signed a 20-year agreement on Thursday to buy three million tonnes of LNG annually from Woodside’s U.S. facilities.The deal follows two agreements signed last week with Cheniere Energy for up to four million tonnes annually from its Sabine Pass and Corpus Christi plants through 2054. Cheniere deliveries are not expected to begin until 2031.“There’s more to come,” Al Kaabi said, adding that QatarEnergy expects further 20- to 25-year agreements by the end of 2026.QatarEnergy’s purchasing target is “much higher” than the combined seven million tonnes per year covered by the Woodside and Cheniere agreements, he said, without giving a specific figure.Al Kaabi said QatarEnergy was in talks with multiple suppliers and would purchase from whichever company offered the best commercial terms.Why QatarEnergy ruled out pipelinesAl Kaabi said the strategy of purchasing LNG from overseas took shape about three months ago, after QatarEnergy considered and ruled out pipeline alternatives.He explained the decision, saying, “As we have seen, pipelines and pump stations or compression stations can be also targets.”Instead, the company plans to rely on its LNG trading operations and fleet of about 200 tankers to move supplies between markets.The approach requires no additional capital spending and is significantly cheaper than building pipelines or additional LNG production facilities, Al Kaabi said.QatarEnergy halted LNG production in early March following Iranian missile attacks on Qatar and declared force majeure for affected buyers on March 4.Qatar accounts for around a fifth of global LNG exports, all of which pass through the Strait of Hormuz. Al Kaabi said the inability to ship supplies had taken a heavy toll on revenue.The planned overseas purchases would give QatarEnergy another way to generate revenue if disruptions to shipments through the strait continue, using its trading operations and shipping fleet to take advantage of price differences between markets.