QatarEnergy CEO: Hormuz crisis may delay LNG expansion projects

Summary

• QatarEnergy says equipment cannot reach Qatar, putting some expansion projects at risk of delay.
• CEO Saad al-Kaabi said the company is currently producing only a very small LNG volume.
• Delays would hit trains due online in 2027 and 2028, tightening global gas supply.

The latest

Some of QatarEnergy's expansion projects could slip because critical equipment is unable to reach Qatar under the Strait of Hormuz crisis, Chief Executive Saad al-Kaabi said Sunday. He told the Qatar Economic Forum in New York that the company is currently producing only a very minute volume of liquefied natural gas, without detailing how far the affected projects might be pushed back.

Details

• The warning: Kaabi said the Hormuz crisis could delay some QatarEnergy expansion projects, tying the risk directly to critical equipment being unable to reach Qatar, according to Reuters. He did not identify which specific projects are exposed or how long any delay might run.
• Current output: The CEO described QatarEnergy's present liquefied natural gas production as a very minute volume, a striking characterization from a company that ranks among the world's largest LNG suppliers. He gave no figure for current output and no comparison with normal production levels.
• North Field East: A few LNG trains under the North Field East expansion are due to start up in 2027, Kaabi said. The project is the first phase of Qatar's multi-stage build-out of the North Field, the offshore reservoir that underpins the country's entire LNG export capacity.
• North Field South: The North Field South expansion is set to begin production in 2028, according to Kaabi. Together with North Field East, it forms the core of Qatar's plan to lift LNG output substantially over the second half of the decade.
• The bottleneck: The constraint Kaabi described is logistical rather than financial or technical: equipment needed for construction cannot physically arrive. That places the schedule risk upstream of the projects themselves, in shipping access rather than in engineering or contracting.
• The venue: Kaabi made the remarks at the Qatar Economic Forum held in New York on Sunday, an unusual setting for a disclosure about production disruption, and one that put the message directly in front of an international investor audience.
• What was not said: QatarEnergy did not publish a revised timeline for either expansion, did not quantify the shortfall in current production, and did not say whether long-term supply contracts with buyers in Asia and Europe are affected by the current volumes.
• Also: Qatar is one of the world's largest LNG exporters, shipping nearly all cargoes through Hormuz.

Background

Qatar ranks among the world's top LNG exporters, and its cargoes transit the Strait of Hormuz, the narrow waterway at the mouth of the Gulf. The North Field expansion program is the country's largest energy investment, designed to raise liquefaction capacity through phased trains starting this decade.

Between the lines

Two disclosures in the same appearance point in the same direction. Production described as very minute speaks to today's export flows, while the equipment bottleneck speaks to capacity years out. Taken together, Kaabi's comments suggest the Hormuz disruption is not only interrupting shipments but also pushing back the timetable for the additional volumes buyers have already been counting on for 2027 and 2028.

What's next

Watch for QatarEnergy to issue a revised startup schedule for the North Field East trains, for any formal notice to long-term LNG buyers, and for shipping access through Hormuz to determine whether equipment deliveries resume.

Source: Reuters