QatarEnergy has once again extended its force majeure declaration, this time notifying Italian utility Edison that four additional LNG cargoes scheduled for Italy's Adriatic LNG terminal will be withheld until early September. This brings the total number of affected cargoes for Edison to 21, representing approximately 2.7 billion cubic meters of natural gas, spanning the period from April to early September. Edison, a unit of French group EDF, has stated it has replaced 14 of these 21 cargoes with alternative supply and does not anticipate the shortfall to impact its end customers. This disruption stems from Iranian missile attacks in March that damaged two LNG-producing trains at Ras Laffan, the world's largest LNG export facility, leading to a curtailment of $20 billion annually in lost revenue and 12.8 million tons per year (about 17%) of Qatar's LNG exports, with repairs expected to take up to five years.
The initial force majeure was declared in March following the Iranian attacks on Gulf oil and gas facilities. While Bloomberg previously reported in June that QatarEnergy was expected to let its force majeure lapse for Asian buyers in July, the situation has since escalated. A more recent development on July 7 saw the Qatari LNG tanker Al Rekayyat struck by Iran near the Strait of Hormuz. Following this attack, QatarEnergy halted its plans to ramp up LNG production at Ras Laffan, keeping operations at a minimum and extending force majeure notices to some Asian buyers into August, and now potentially into October as suggested by recent reports.
This continued disruption from Qatar, which supplied about a fifth of the world's LNG last year, is expected to keep natural gas prices above pre-war levels. The market impact is significant, particularly for Europe, which is reportedly behind on winter stockpiling. The wide arbitrage of approximately $1.4 to $2 USD/MMBtu between the JKM and TTF indexes indicates that marginal Atlantic cargoes are being pulled towards Northeast Asia, rather than into European injection, at a critical time for inventory building. The uncertainty surrounding Qatar's production restart, exacerbated by the recent tanker attack and subsequent change in output plans, is contributing to anxiety in global gas markets.
