QatarEnergy Extends LNG Force Majeure Amid Strait of Hormuz Closure

QatarEnergy has extended force majeure notices, consequently affecting its ability to deliver liquefied natural gas (LNG) cargoes to Italian utility Edison and some Asian clients. The Strait of Hormuz closure is cited as the reason for these extensions, according to Edison and trading sources cited by MarineLink / Maritime Reporter on Monday.

Edison, identified as one of QatarEnergy's primary European customers, will not receive LNG cargoes until early December. This represents the latest extension under a force majeure notification initially issued in April, following disruptions attributed to the US-Iran conflict. Clients in Asia, specifically in Bangladesh and Pakistan, have also reportedly been informed that their force majeure notices have been extended until November, according to two trading sources.

QatarEnergy did not respond immediately to a request for comment regarding these developments.

Impact on Qatar's LNG Exports

The ongoing conflict has significantly impacted Qatar's economic activity, particularly its liquefied natural gas exports. MarineLink / Maritime Reporter noted that Reuters calculated Qatar's LNG exports to have been reduced by 96% by the end of August. While other Gulf exporters have reportedly managed to covertly ship oil out of the Strait of Hormuz, Qatar had exported only 18 LNG cargoes by the end of August. This figure marks a substantial decrease from the 509 cargoes exported during the same period in the previous year, according to data intelligence firm ICIS.

Market Implications and Supply Competition

With the Northern Hemisphere's winter heating season commencing, European buyers are expected to seek alternative sources to replenish their gas storage inventories ahead of the coldest months. This situation is anticipated to intensify competition with Asian clients for the limited global supply available, likely contributing to sustained elevated gas prices.

Italy has expressed confidence in its ability to meet the European Union's gas buffer target. However, several other European nations, including Germany, are reportedly accelerating efforts to fill their storage facilities.

Edison communicated via an Italian energy markets platform that QatarEnergy would cancel an additional six LNG cargoes, bringing the total number of undelivered shipments to 35. The Italian subsidiary of France's EDF has successfully replaced 23 of these cargoes thus far, primarily by sourcing from US suppliers to compensate for the delayed deliveries from the Gulf region.

Edison holds a long-term contract with QatarEnergy for the annual supply of 6.4 billion cubic metres of natural gas to Italy. This volume represents approximately 10% of Italy's total gas consumption. The contract, which commenced in 2009, is set to span 25 years.