LNG market participants are grappling with a potential supply shortfall as the US-Iran conflict stretches into its third day and disrupts LNG shipments from Qatar and the UAE, which jointly account for about 20 percent of global LNG supply, according to a new report by Vortexa.
State-owned LNG giant QatarEnergy said on Monday that it has stopped production of LNG due to military attacks on its operating facilities in Ras Laffan and Mesaieed.
Qatar and the UAE have no alternative besides the Strait of Hormuz to export cargoes loaded at their facilities, but Iran has reportedly damaged three oil tankers in the narrow waterway and warned vessels against crossing.
The Strait of Hormuz effectively serves as a chokepoint, with shipowners suspending transits while major insurers have cancelled war-risk cover and raised insurance rates in the Middle East Gulf.
According to the report, produced by Vortexa LNG analyst Ken Lee, the last laden carrier to cross the Strait of Hormuz was the Endesa-controlled Gaslog Shanghai on February 28.
Currently, 16 vessels are north of the Strait of Hormuz, of which 11 are laden and five are ballast.
There are hence a limited number of ballast vessels remaining to load at Qatar’s Ras Laffan or the UAE’s Das Island facilities, the report said.
Ras Laffan is home to 2.3 million cubic metres of aggregate LNG storage tank capacity – equivalent to 13 conventional LNG carriers, or four days of normal Qatar loadings.
However, only part of this capacity will currently be free, indicating a looming risk of needing to curtail operations in the coming days – even before the March 2 halt, the report said.
Another 16 LNG vessels are holding their position in the Arabian Sea offshore of Oman. Of these, 13 are controlled by QatarEnergy with others controlled by CPC and Shell, it said.
According to the report, the disruption has not yet spread to Oman’s own LNG export terminal, located south of the Strait of Hormuz, with a cargo loaded onto the TotalEnergies-controlled carrier LNG Endurance on March 1.
The vessel has departed the terminal and is declaring for Incheon in South Korea.
Also, three ballast vessels are en route to Oman: BP-controlled Attalos, OQ Trading-controlled Cool Explorer, and Vitol-controlled Yari LNG, the report said.