Uncertainty over Qatar's LNG supplies puts Bangladesh at risk

As QatarEnergy has extended the force majeure period over LNG supplies amid the ongoing situation surrounding the Strait of Hormuz, Bangladesh is among the countries facing the greatest risk.

LNG transportation through the Strait of Hormuz remains almost completely halted under normal conditions.

As a result, LNG supplies to buyers in Europe and Asia have become uncertain, according to Euronews.

QatarEnergy has told buyers in Pakistan that supplies could be cancelled through October. LNG shipments scheduled for Bangladesh are also expected to face disruptions beyond September. Several European buyers have received similar notices.

Bangladesh normally imports LNG from two sources: long-term contracts and the spot market. It has long-term agreements with Qatar and Oman. Since the war began in the Middle East, supplies from both countries have been regularly disrupted.

Although one or two cargoes have arrived occasionally, they have been insufficient to meet demand. Bangladesh has therefore been trying to secure emergency imports. However, several LNG cargoes have failed to arrive on time, worsening the gas shortage in the country.

According to a Euronews report, the latest QatarEnergy cargo cancellations have been extended until early November. Buyers in Europe and Asia are already trying to source LNG from alternative suppliers.

Some have begun using different fuels, while others are cutting gas consumption. However, it remains uncertain when LNG transportation through the Strait of Hormuz will return to normal.

Italian energy supplier Edison said QatarEnergy would be unable to deliver five more LNG cargoes scheduled between late September and early November.

Under its agreement with QatarEnergy, Edison has had 29 cargoes cancelled since April. Those cargoes were expected to contain around 3.8 billion cubic metres of natural gas.

Edison said it had secured alternatives for 21 of the cancelled cargoes, containing around 2 billion cubic metres of gas. As a result, the company said it was able to meet its commitments to customers.

QatarEnergy first declared force majeure over the situation surrounding the Strait of Hormuz in March. As conditions continued to deteriorate, it extended the period each month. Anne-Sophie Corbeau, an expert at Columbia University’s Centre on Global Energy Policy, said the situation could continue for some time unless a political solution is reached.

Corbeau also said QatarEnergy had been unable to provide any assurance about when normal LNG exports would resume. That is why the force majeure period has been extended on a month-by-month basis.
QatarEnergy did not respond to Euronews’ request for comment.

Qatar’s LNG supplies to the global market have almost come to a halt because of the conflict. According to ICIS data, Qatar exported only 18 LNG cargoes during the first six months of the war, compared with 509 during the same period a year earlier.

As a result, Qatar’s revenue from gas sales has fallen by about USD 24 billion.

Other exporters are, however, making up part of the shortfall. According to Corbeau of Columbia University’s Center on Global Energy Policy, LNG supplies from the United States and Canada have increased. New facilities that began production over the past year have also contributed. LNG production has increased in Nigeria and Malaysia as well.

Even with these increases in production, however, the shortfall in LNG supplies from Qatar is not being fully covered. Gas consumption has declined in some Asian markets, while some buyers have turned to other fuels. Europe, meanwhile, is using more gas from storage rather than competing to buy LNG at high prices on the spot market.

Corbeau said the cargoes that are available are going to buyers who can afford to pay more. Despite high LNG prices, some buyers in Southeast Asia remain active in the market.

According to Corbeau, LNG supplies from Qatar and the United Arab Emirates could remain disrupted for an extended period. Although LNG production may increase in other countries during this time, global LNG trade could still decline in 2026.

The crisis is not affecting all importing countries equally. Between April and August, the European Union’s LNG imports fell compared with the same period last year. China’s imports also declined.

According to Corbeau, countries that rely heavily on LNG and source a large share of their imports from Qatar or the UAE will be hit hardest. The risks are even greater if they cannot secure enough alternative cargoes. Buyers dependent on short-term contracts are particularly vulnerable.

Corbeau considers Pakistan, Bangladesh and India among the countries most at risk. Japan is relatively safer because it is less dependent on Qatar for LNG imports. It has secured supplies from various sources through long-term contracts, with the contract prices linked to US oil and gas prices.

New LNG export infrastructure is being developed in the United States, Canada, Australia and Nigeria. Once these facilities become operational, supplies from outside Qatar could gradually increase. However, it could take until 2028 for the global LNG market to regain the comfortable balance between supply and demand that existed previously.

Before the war with Iran, nearly one-fifth of global LNG trade passed through the Strait of Hormuz. Some oil tankers are still using the waterway, but the number of LNG carriers is relatively small. These vessels are specialised, making it difficult to find alternatives quickly. Qatar also has few, if any, viable alternative routes for its gas exports.

It could take around two months to resume production at QatarEnergy’s 12 LNG production units that were not damaged.

QatarEnergy said repairing two other production units damaged in attacks in the Ras Laffan area could take three to five years.

LNG transportation resumed on a limited scale in June after a memorandum of understanding was signed between the United States and Iran. However, the resumption did not last long. Following renewed attacks, the risks to shipping have increased again.