QatarEnergy (QE), Qatar's state-owned energy corporation, suggested it may declare force majeure on long-term supply contracts, including those with Korea, due to the fallout from strikes on key liquefied natural gas (LNG) facilities.
Saad Al-Kaabi, QatarEnergy Chief Executive Officer (CEO), said in an interview with Reuters on the 19th (local time) that "we may have to declare force majeure for up to five years on long-term LNG contracts supplying Korea, China, Italy and Belgium."
Al-Kaabi said the attack damaged about 17% of the corporation's LNG export capacity and that recovery is expected to take at least three years and up to five years.
Korea is one of the major importers of Qatari LNG. It brings in about 6 million tons (t) annually, which is slightly under 20% of the country's total LNG imports.
If QatarEnergy actually declares force majeure, Korea will be unable to secure long-term contracted volumes. In that case, the shortfall would have to be sourced on the spot market, where prices are relatively higher, potentially passing the burden on to industry as well as household gas bills.
CEO Al-Kaabi said, "We never expected that Qatar would suffer such an attack, especially during Ramadan, from a Muslim country like a brother (Iran)." He added, "Above all, hostile acts must cease for production to resume." This is interpreted to mean that unless the current military tensions are resolved, even starting restoration work will be difficult.
According to QatarEnergy, the attack directly damaged two of the 14 LNG production lines (trains) and one of the two gas-to-liquids (GTL) facilities. As a result, LNG production disruptions of about 12.8 million t per year are expected, equivalent to about 17% of total export capacity.
Al-Kaabi said, "Annual revenue losses from the three struck facilities will reach about $20 billion (about 30 trillion won)," adding, "These facilities are core national infrastructure into which $26 billion was invested just for construction years ago and should never be targets of attack."