QatarEnergy will not be able to supply liquefied natural gas (LNG) to Bangladesh, Pakistan and several other Asian countries until November.
The decision was taken as supply operations have been disrupted by the closure of the Strait of Hormuz. For the same reason, QatarEnergy will also be unable to supply LNG to Italian power and energy company Edison until early December.
Supply disruptions began in April due to the US-Iran war. QatarEnergy then announced that it was suspending supplies for the first time due to force majeure or unavoidable circumstances. The period has since been extended several times, according to Reuters.
Reuters reported that QatarEnergy did not immediately respond on the matter.
Qatar is among the countries that have suffered the most economic losses due to the war with Iran. According to Reuters calculations, the country’s LNG exports had fallen by 96 per cent by the end of August.
Data from energy information and analysis firm ICIS showed that Qatar exported only 18 LNG cargoes between January to August this year, compared with 509 during the same period last year.
LNG competition to increase during winter
Meanwhile, winter is coming. Gas consumption in Europe will increase in the coming days as it is needed there to keep homes warm during winter. So, Gas demand typically increases in Europe during this period. Since the Russia-Ukraine war began, Europe has reduced its reliance on Russian gas.
According to information on the European Commission’s website, legislation has been enacted to completely stop gas imports from Russia by the end of this year. As a result, Europe’s reliance on LNG from the Middle East has increased.
However, LNG supplies have become limited since the US-Iran war began. In this situation, competition between buyers in Europe and Asia may increase further. As a result, gas prices are expected to remain high in the international market, according to reports.
Italy has said it is confident of meeting the European Union’s target for gas storage. However, Germany and several other countries are trying to increase their gas reserves quickly.
In a message posted on an Italian energy market platform, Edison said QatarEnergy would cancel the delivery of six more LNG cargoes. This would bring the total number of LNG cargoes Edison has not received from QatarEnergy to 35.
The issue is important for Bangladesh because the country relies on imported LNG to address gas shortages in power generation and industrial operations. If supply disruptions from Qatar continue for an extended period, Bangladesh may have to source LNG from alternative suppliers.
Winter is coming, gas demand in Europe will rise during the season. LNG prices in the spot market are almost certain to increase.
However, analysts believe that if the supply shortage worsens, it could become difficult for Bangladesh to secure LNG even at higher prices. During a supply crisis, countries with greater purchasing power will prioritise securing their own supplies. Bangladesh may find it difficult to compete with them.