The LNG shipment from Qatar is traveling north in the Red Sea to deliver gas to Europe via the Suez Canal. This rare transport is taking place on the shortest but most dangerous route to Europe under conditions where there are threats from the Houthis against tankers in the southern Red Sea and the Bab el-Mandeb Strait.
Shipment Details and Contracts
This tanker loaded in Qatar in August and is now heading to Poland. QatarEnergy has a long-term contract with the Polish energy group Orlen and other European buyers to supply LNG to the European market. However, since the onset of the Iran war, the Strait of Hormuz has been closed, and attacks on Qatar's liquefaction facilities at Ras Laffan, the largest such facility in the world, have caused damage.
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Impact of the War and LNG Market Status
QatarEnergy has been extending the state of alert it declared in early March on a monthly basis. Qatar's LNG exports are nowhere near the speed and level of crude oil export recovery from the Middle East. Most LNG carriers are moving in the dark in the Strait of Hormuz, making their tracking more difficult than ever and complicating the estimation of flows and global supply balances.
In recent weeks, some Qatari and UAE shipments have successfully passed through the Strait of Hormuz, but the volumes are so low that they negatively impact the global LNG balance. Additionally, LNG traffic in the Strait of Hormuz seems to be increasing despite heightened threats to shipments in this chokepoint. However, LNG flows are still over 75% below pre-Iran war levels.
Due to the shortage of Qatari gas, LNG demand in Asia is decreasing while Europe is forced to pay high costs for gas. However, European storage is only 74% full, down from 86% at the same time last year and five years ago. The rare Qatari LNG shipment observed traveling through the Red Sea increases the speed of delivery to Europe, instead of passing around the Cape of Good Hope in Africa.
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