QatarEnergy is buying long-term LNG supplies from the US and other suppliers to build a hedge against future disruptions in the Strait of Hormuz. Its CEO says the plan would generate revenue if the strait closes and gas prices spike.
QatarEnergy is buying long-term supplies of liquefied natural gas from the US and other suppliers to build a trading and arbitrage hedge that would generate revenue if exports through the Strait of Hormuz are disrupted in the future, CEO Saad Sherida Al-Kaabi told Reuters on Thursday.
Kaabi's remarks reveal for the first time how Qatar, one of the world's largest LNG producers, plans to offset lost income from the Iran war and protect revenue against future disruptions. He described a closure of the strait as the contingency the company is planning for. According to Reuters, Kaabi said "you’d immediately see a spike in gas price" in that scenario, and QatarEnergy would earn revenue it otherwise wouldn't.
Purchase deals require no capital spending
The purchase deals require no capital spending and are much cheaper than building pipelines or additional LNG trains, Kaabi said. The company expects reasonable returns in normal circumstances, he added.
QatarEnergy expects to sign more long-term LNG purchase deals with US and other suppliers by the end of 2026, with a target much higher than 7 million tons per year. The company is talking to everybody, including Venture Global, and will buy from whoever offers the best commercial terms, Kaabi said.
War damage and expansion plans
The CEO ruled out pipelines bypassing Hormuz, stating that any infrastructure anywhere in the region can be targeted. Meanwhile, two LNG trains damaged in Iranian attacks will take about three years to repair, causing Qatar to lose 17% of LNG capacity in the interim.
Still, the company can restart full LNG production within one week of a peace deal, provided ships are available. QatarEnergy has not cancelled any announced project, and the 142 million tons per year LNG expansion plan remains unchanged, with all contracts awarded.
Kaabi said the company has met with the Iranian acting petroleum minister twice in the past two weeks to explore post-war cooperation in oil and gas.
Sources: Investing.com (Reuters), Investing.com
Trading involves risk.
Risk Disclaimer
