Qatar's state-owned energy corporations QatarEnergy (QE) hinted it may declare force majeure on long-term supply contracts, including with Korea, due to the fallout from strikes on major liquefied natural gas (LNG) facilities.
On the 19th (local time), QatarEnergy Chief Executive Officer Saad Al-Kaabi told Reuters that "with regard to long-term LNG contracts supplying Korea, China, Italy and Belgium, we may have to declare force majeure for up to five years."
Al-Kaabi said the attack damaged about 17% of the company'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 a year, which is about 14% of the country's total LNG imports.
If QatarEnergy does in fact declare force majeure, Korea will be unable to secure volumes under long-term contracts. In that case, the shortfall would have to be sourced on the relatively higher-priced spot market, which could pass costs on to industry as well as household gas bills.
Al-Kaabi said, "We never expected Qatar to come under such an attack, and during Ramadan, from a Muslim country like a brother (Iran)." He added, "Above all, hostilities must cease for production to resume." This is interpreted to mean that unless the current military tensions are resolved, it will be difficult to even begin restoration work.
According to QatarEnergy, the attack directly damaged two of the total 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 tons a year are expected, equivalent to about 17% of total export capacity.
Al-Kaabi said, "The annual revenue loss from the three struck facilities will be about $20 billion (about 30 trillion won)," adding, "These facilities are core national infrastructure that alone cost $26 billion to build years ago and should never be targets of attack."
Korea Gas Corporation (KOGAS) said, "We will make every effort to ensure stable LNG supply by securing timely volumes and diversifying import sources," adding, "We will respond in a timely manner to ensure there is no disruption to domestic natural gas supply stability."