Middle East Conflict Costs QatarEnergy an LNG Contract

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Written by Daniel Graeber for IIR News Intelligence (Sugar Land, Texas)

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Summary

QatarEnergy told some of its European clients in October that it would be the end of December before some volumes of LNG show up. For Polish energy company Orlen, that prompted the cancellation of a long-term supply deal.

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QatarEnergy Takes Another Blow

Polish energy company Orlen said it terminated a long-term supply contract to source liquefied natural gas from Qatar, due to complications stemming from conflict in the Middle East.

According to Industrial Info Resources data, Poland is preparing for a new regasification terminal at the Port of Gdansk. Gaz-System S.A. is behind a floating terminal that will be able to regasify 397 million cubic feet of gas per day by 2028.

Industrial Info Resources offers more information on this development in its Global Market Intelligence (GMI) Oil & Gas Terminal Plant and Project databases, where subscribers can find details--including construction schedules, investment values and necessary equipment--in a detailed project report.

An existing LNG Terminal in Świnoujście can regasify as much as 734.4 million cubic feet per day, data show. It's been in service in 2016. Subscribers can learn more from a plant profile.

On Tuesday, Orlen said it opted to forfeit one of its supply contracts for liquefied natural gas (LNG) from QatarEnergy because of ongoing force majeure declarations limiting its export ability. That's the first casualty for Qatar since the conflict began with U.S.-Israeli airstrikes on Iran in late February.

The LNG infrastructure in Qatar was heavily damaged early in the conflict. Industrial Info Resources found that drone damage to the Ras Laffan North and Ras Laffan South facilities led to a US$26 billion repair bill.

Subscribers can learn more from detailed profiles of Ras Laffan North and Ras Laffan South.

Tensions are still high. The United Kingdom Maritime Operations Center reported an "incident" Tuesday involving a tanker in the Strait of Hormuz, and another vessel was damaged by an unknown projectile off the coast of Oman.

The conflict, along with sanctions on Russia, is limiting gas availability in the European market, a major concern as the winter heating season approaches. Last month, QatarEnergy told some of its European clients that LNG deliveries sidelined by a force majeure declaration in April would be delayed until the end of December.

By the Numbers

• 42% of total gas imports for Poland came from LNG
• $26 billion: Repair bill for Qatari LNG infrastructure damaged by drones

Little Impact for Poland

For Orlen, the contract in question was signed in 2016 for 1 million metric tons per annum (MTPA) of LNG through 2034. The company, however, said its supplies were adequate even without the Qatari contract.

"The decision to terminate the agreement does not affect the security of gas supplies," it said. "Gas production from the company's own fields, together with its long-term gas supply agreements, ensures full coverage of Orlen Group's gas requirements."

According to Industrial Info Resources data, Orlen has a deep portfolio in both Poland and globally. Its refinery in Gdansk can process as much as 210,000 barrels of crude oil per day. Subscribers can learn more from a plant profile.

Elsewhere, Orlen, the largest oil and gas company in Poland, said LNG regasification was the second-largest source of gas last year, accounting for 42% of total gas imports. The rest came from interconnectors with Germany, the Czech Republic, Lithuania and Slovakia.

For Qatar, it's booked LNG volumes from U.S. terminals as an alternative. In October, the company secured long-term supplies from the planned Louisiana LNG terminal, controlled by Australian energy giant Woodside, and from Cheniere Energy.

The Industrial Info Resources GMI database offers a detailed project report and plant profile for Louisiana LNG.

The U.S. is the world leader both natural gas production and LNG exports. The latter position has helped ensure global energy security since at least 2022, when sanctions imposed on Russia for the invasion of Ukraine went into force.

Feed gas supporting U.S. LNG hit a record during the weekend, topping some 20 billion cubic feet per day (Bcf/d). By Wednesday, levels were closer to seasonal norms of about 19 Bcf/d.

Key Takeaways

• An LNG contract for Poland is the first casualty of war for QatarEnergy.
• Polish energy company Orlen said its supplies are ample heading into the winter heating season.

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About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news, and analysis on the industrial process, manufacturing, and energy-related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified, and verified plant and project opportunities. Across the world, Industrial Info Resources is tracking over 250,000 current and future projects worth $30.2 trillion (USD).