QatarEnergy Stops LNG, Some Downstream Production

QatarEnergy has announced the halt of LNG and “some” downstream production in separate statements posted on its website this week.

In a statement posted on its site on Monday, QatarEnergy announced that “due to military attacks” on its operating facilities in Ras Laffan Industrial City and Mesaieed Industrial City in the State of Qatar, the company “has ceased production of liquefied natural gas (LNG) and associated products”.  

“QatarEnergy values its relationships with all of its stakeholders and will continue to communicate the latest available information,” the company added in that statement.

In a follow up statement posted on its website on Tuesday, QatarEnergy said, “further to the decision by QatarEnergy to stop production of liquefied natural gas (LNG) and associated products”, the company “is stopping the production of some downstream products in the State of Qatar, including urea, polymers, methanol, aluminum and other products”.

In a market update sent to Rigzone on Tuesday, Rystad Energy said natural gas prices had increased by over 40 percent following QatarEnergy’s decision to cease LNG production, “combined with operations halted through the Strait of Hormuz, removing significant volumes from the global market as conflicts in the Middle East escalate”.

“Still, despite a more than 52 percent surge at Europe’s benchmark Title Transfer Facility (TTF) on 2 March, Rystad Energy expects the current supply shock to have a limited long-term impact on global gas and liquefied natural gas markets,” the company added.

“This outlook is based on the expectation that the disruption will be temporary and manageable in terms of volumes,” it continued.

In this update, Jan-Eric Fahnrich, Rystad Energy Senior Analyst, Gas & LNG Research, warned that, “with Qatari LNG output halted and the Strait of Hormuz closed, global LNG supply is set to tighten sharply, a trend already reflected in recent price movements”.

“The scale of lost volumes will depend on the extent of any infrastructure damage, which is still being assessed, and the duration of the Strait’s closure to maritime traffic,” Fahnrich added.

“In a scenario where there is limited or no damage and hostilities subside quickly, leading to a 15-day production halt, we estimate a 4.3 percent decline in 2026 output, equivalent to around 3.3 million tons,” he continued.

A more prolonged disruption could result in 5.6 Mt of lost supply, Fahnrich warned. The Rystad analyst added that a full-scale interruption lasting four to five weeks before the Strait reopens to commercial traffic would translate into a loss of approximately 11.2 Mt for the full year 2026.

“Given the central role of LNG exports in Qatar’s economy and in global trade flows, we expect production to be restored within weeks rather than months,” Fahnrich said.

In a note sent to Rigzone on Tuesday, Morningstar Equity Analyst Adam Baker highlighted that Qatar is the world’s largest single producer of LNG and warned that a shutdown could last weeks or months, depending on the extent of the damage and the length of the shutdown.

“If only a few days and no major damage, it could be back up and running within a few days. Longer, and it could take weeks,” he warned.

Baker revealed that Morningstar was maintaining its $3.30 Henry Hub midcycle price, noting that an extended shutdown or further attacks on the idled LNG facility would change its outlook.

In a statement sent to Rigzone on Tuesday, Enverus subsidiary Enverus Intelligence Research (EIR) said QatarEnergy related LNG disruptions affect an estimated 10 to 11 billion cubic feet per day, “or about 20 percent of global LNG trade”.

“Given the limited short-term supply elasticity in LNG markets, EIR expects price, rather than volume, to absorb much of the initial adjustment,” EIR noted in that statement.

To contact the author, email andreas.exarheas@rigzone.com