More buyers could be pushed to seek and contract LNG supply from producers outside the Middle East, such as the U.S. and Canada, if a prolonged war continues to choke supply from the Gulf region, a senior executive at Japan’s biggest LNG buyer, Jera, told Reuters.
“With 90 million metric tons from the Middle East absent from the global LNG market, the longer this persists, the greater the impact,” Ryosuke Tsugaru, Jera’s Senior Managing Executive Officer, told Reuters in an interview on Wednesday.
A month before the war erupted, Jera signed a long-term LNG sale and purchase agreement with QatarEnergy to secure the supply of 3.0 million tonnes per annum (MTPA) for 27 years, with deliveries expected to commence in 2028.
However, Jera expects the start of deliveries could be delayed if the war continues for months rather than weeks and stalls the expansion of Qatar’s LNG capacity, which is the world’s biggest LNG expansion project under way.
“Our exposure to the Middle East is not significant,” Tsugaru told Reuters, adding that “we are considering additional spot purchases to address certain cargo shortfalls.”
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So far, Jera has not received any emergency supply requests from any Japanese utility, the executive told Reuters.
The war has already hit Qatar’s LNG exports. State firm QatarEnergy halted the Ras Laffan LNG complex, the world’s biggest, in the early hours of the war, mostly as a precaution following a drone attack near the site and because of the de facto closed Strait of Hormuz.
But in the past few hours Iran followed through its threats to attack energy infrastructure in the region following a strike at its huge South Pars gas field on Wednesday.
On Thursday, QatarEnergy confirmed damage from an attack, saying that “several of its Liquefied Natural Gas (LNG) facilities were the subject of missile attacks, causing sizeable fires and extensive further damage.”
By Tsvetana Paraskova for Oilprice.com
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