Asian LNG buyers rush to lock in US supply deals amid Hormuz crisis

Liquefied natural gas buyers across Asia are accelerating talks to lock in long-term supply contracts with US exporters, as seven months of disruption to the Strait of Hormuz and damage to Qatar's export infrastructure force a rethink of the region's reliance on Middle Eastern energy.

Companies in Thailand, Pakistan, and Bangladesh are in discussions to sign long-term deals with US suppliers, officials said this week at the Gastech conference in Bangkok. China Gas Holdings signed a 20-year sales and purchase agreement with Venture Global ↗ 1.69% for 0.5 million tonnes per annum of LNG starting in 2030, bringing the two companies' combined long-term commitments to 2.5 million tonnes a year. The deal was struck despite ongoing trade tensions between Washington and Beijing.theedgemalaysia+2

Diversification Imperative

The push comes as the Iran war, which began in late February when the US and Israel launched military strikes against Iran, continues to choke a waterway through which roughly a fifth of global LNG flowed before the conflict. Qatar's Ras Laffan terminal — the world's largest LNG export facility — remains largely offline after Iranian missile strikes in March damaged two of its 14 liquefaction trains.oxfordenergy+1

Asian spot LNG prices have surged to around $30 per million British thermal units, compared with about $8 per MMBtu for deliveries under long-term US contracts, according to officials at US and Japanese companies speaking at Gastech.theedgemalaysia

"Buyers around the world really are more focused on diversifying their LNG procurement," Yukio Kani, chairman of Jera Co, one of the world's largest LNG buyers, said on Bloomberg TV. "Some rely too much on Qatar, like more than 50% or 60%."theedgemalaysia

New Investment and Supply

Inpex Corp, Japan's largest energy producer, is considering investing in a US LNG export project, CEO Takayuki Ueda said in an interview at the conference. The flow of LNG through the strait, he said, "will not return to the previous status quo."theedgemalaysia

New North American LNG supply has already replaced more than half of the Middle Eastern volumes lost from the global market this year, according to Cederic Cremers, Shell's ↘ 1.63% president of integrated gas. ExxonMobil Exxon Mobil Corporation ↘ 0.16% expects US LNG to account for about 30% of global supply by 2030, with projects from Woodside Energy ↗ 0.48% and Cheniere Energy ↗ 3.00% currently marketing supplies for delivery by the end of the decade.theedgemalaysia

Still, rising contract prices due to supply chain bottlenecks and a broader push by some buyers to reduce LNG exposure altogether may slow the pace of new deals. And companies are looking beyond the US — Inpex is exploring projects in South America, while Thai officials at Gastech expressed interest in Canadian and Asia-Pacific LNG.theedgemalaysia