QatarEnergy seeks more US LNG deals to hedge Hormuz risk

QatarEnergy is negotiating more long-term contracts to buy liquefied natural gas from US exporters. People familiar with the matter told Bloomberg on Thursday, November 5, that the state company aims to sign deals in the coming months covering 3 million to 6 million tons a year. The talks follow agreements in late October with Cheniere Energy ↘ 4.26% and Woodside Energy ↘ 0.33% that together cover 7 million tons a year. The push reflects how the Iran conflict has forced the Gulf producer to look for supply beyond the Strait of Hormuz.bloomberg.com

Venture Global and Commonwealth in Talks

According to Investing.com's summary of the Bloomberg report, the parties in the next round of talks include Venture Global ↘ 4.00% and Commonwealth LNG, a project backed by Kimmeridge. In October, Reuters reported that QatarEnergy was in advanced talks with Venture Global to buy at least 3 million tons a year. Qatar had already been buying spot cargoes from the company to serve customers while the strait remains blocked. Venture Global has more uncommitted US capacity than any other exporter, with 10 million tons a year unsold, based on Rapidan Energy data.finance.yahoo.com+2

CEO Saad Sherida al-Kaabi had signaled more deals were on the way. "There's more to come," he told Reuters on October 29. He said the company's target was "much higher" than 7 million tons a year and that it was talking with "everybody." He also said he expected more 20- to 25-year contracts to be signed this year.reuters.com

Deals Already Signed

On October 22, Cheniere agreed to supply up to 4 million tons a year through 2054, split between its Sabine Pass and Corpus Christi plants. Deliveries are due to start in 2031, and 1 million tons of the volume depends on a Sabine Pass expansion going ahead. A week later, QatarEnergy signed a 20-year deal for up to 3 million tons a year from Woodside's Louisiana LNG project, with deliveries expected from 2030. Al-Kaabi said the volumes make QatarEnergy the largest buyer of US LNG.americanpress.com+1

Hormuz Disruption Behind the Strategy

Iranian strikes in March damaged two of the 14 LNG trains at Qatar's Ras Laffan complex. The repairs are expected to keep 12.8 million tons a year of capacity offline for three to five years. QatarEnergy has also renewed force majeure notices every month while the strait stays closed.reuters.com

Al-Kaabi has described the US purchases as a trading hedge rather than a direct replacement. He told Reuters that long-term customer contracts are tied to specific terminals and destinations. Wood Mackenzie projects that QatarEnergy will control 23.7 million tons a year of US LNG by 2033, a total that includes its 70% stake in Texas's Golden Pass plant. "In a scenario where you have a closure of the strait… you'll be able to generate revenue for QatarEnergy that otherwise wouldn't be generated," al-Kaabi said.dailycaller.com+1