QatarEnergy declares force majeure on some LNG contracts amid regional escalations

QatarEnergy

QatarEnergy has announced force majeure on some of its long-term liquefied natural gas contracts with customers in Italy, Belgium, South Korea and China after a war the U.S. and Israel is waging against Iran continues to disrupt production as well as supplies worldwide.

Force majeure, as the name suggests, is a contract clause that based on which party to suspend or delay its obligations in light of circumstances out of its control.

The decision comes after damage to Qatar’s gas facilities followed Iranian strikes on sites in Ras Laffan, which Qatar’s Minister for Energy Affairs and QatarEnergy CEO Saad Al-Kaabi told qatarenergy.com had taken out about 17 percent of its LNG exports capacity.

Two of Qatar’s 14 LNG trains and one gas-to-liquids facility were damaged, Al-Kaabi said, and repairs would take between three to five years, impacting an annual output around 12.8 million tonnes and estimated annual revenue losses of $20 billion.

The disruption comes against a backdrop of regional escalations that have rattled global energy markets. Iran has caused significant disruption to traffic through the Strait of Hormuz, a vital waterway for about one-fifth of the world’s oil and LNG trade. On March 22, Iranian media said the strait was open to shipping that has no relation with states it views as enemies.

The most recent escalation in Gulf energy markets began after Israeli strikes on Iran’s vast South Pars gas field on March 18, triggering threats and retaliatory attacks against energy infrastructure throughout the region.

Qatar condemned the Israeli attack on South Pars as “a dangerous & irresponsible step” and a threat to global energy security, said Majed Al-Ansari, spokesman for its Foreign Ministry.

The Gulf countries have also condemned continuing strikes on energy facilities throughout the region, warning that such attacks contravene international laws and could compound market instability worldwide.