QatarEnergy has signed two long-term contracts to purchase up to 4 million tons of liquefied natural gas (LNG) annually from Cheniere Energy. These agreements, announced on Thursday, come at a time when QatarEnergy is facing serious damage to its export facilities due to the war with Iran.
Contract Details
The contracts include the purchase of 2 million tons per year (MTPA) from the Sabine Pass facility in Louisiana and another 2 million tons from the Corpus Christi facility in Texas. Deliveries will begin in 2031 and continue until 2054.
Under these contracts, QatarEnergy will purchase liquefied natural gas on a Free on Board (FOB) basis and will be responsible for transporting the shipments from U.S. terminals. Pricing will be tied to the Henry Hub natural gas index plus a fixed fee.
Impact of the War with Iran
These contracts were signed while QatarEnergy is facing significant disruptions in its LNG production. Last March, Iranian missile attacks on the industrial city of Ras Laffan in Qatar damaged two LNG production lines with a combined capacity of 12.8 MTPA, eliminating about 17 percent of Qatar's export capacity. QatarEnergy has warned that repairs may take three to five years and could result in an annual loss of $20 billion in revenue.
While U.S. contracts will not send shipments until the early 2030s, these agreements provide QatarEnergy with an additional supply source outside the Gulf, where energy and transportation infrastructure face increasing threats during this conflict.
QatarEnergy has described these agreements as part of its overall strategy to diversify its global LNG portfolio. Saad Sherida Al-Kaabi, Qatar's Minister of Energy and CEO of QatarEnergy, stated: "This large long-term purchase expands and diversifies our global LNG portfolio and strengthens our ability to meet the changing market needs."
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