- Iranian strikes forced the shutdown of Qatar’s Ras Laffan LNG complex, halting exports and cutting off a major supply source for Asia.
- Asian buyers are seeking alternative LNG, diverting cargoes from the U.S. and competing with Europe, while some countries struggle to secure enough supply.
- With up to 20% of global LNG supply offline, Qatar’s recovery is taking weeks to months.
Asia is the biggest market for liquefied . Asia is also the destination of up to 90% of Qatari and Emirati LNG—or was, until this month. With the shutdown of Qatar’s Ras Laffan LNG complex and the Strait of Hormuz traffic disruption, Asia is facing a lot of energy supply pain.
QatarEnergy announced a complete halt to LNG production after Iranian drone strikes hit facilities at Ras Laffan Industrial City and Mesaieed Industrial City on March 2. A force majeure declaration followed on QatarEnergy exports. The move started a chain reaction that saw commodity traders sourcing LNG from the Gulf state also declaring force majeure on deliveries to clients—a lot of them in Asia.
As usually happens when a shortage emerges in a market, buyers sought alternatives, which resulted in LNG cargos originating from the U.S. Gulf Coast and headed for Europe getting diverted to Asia. Bloomberg reported this week that at least nine U.S. LNG cargoes have been diverted so far, but there will probably be more. Asian gas prices are more enticing for U.S. LNG producers until the European market catches up, meaning the price of gas rises enough to motivate selling more liquefied gas to the Europeans.
Meanwhile, Asian LNG importers are scrambling to secure supplies in anticipation of a prolonged disruption in the Middle East. A few months of no Qatari LNG is now a realistic scenario, especially after Qatar’s energy minister confirmed it would take a while to restart operations at Ras Laffan. According to Saad al-Kaabi, the return to normal operations could take “weeks to months”, even if the war ended now. According to analysts, as reported by Energy Intelligence, the disruption would last a minimum of between four and six weeks. In other words, Asian LNG importers are doing well in preparing. The question, however, is whether there is enough LNG to go around.
In 2025, Qatar exported 81 million tons of liquefied natural gas. The UAE exported another 5 million tons. The overwhelming bulk of those volumes—90%—went to Asia. This is quite a massive exposure to just two suppliers but the economics justify it, and few could have predicted the scale of energy commodity market disruption from the latest Middle East war.
Asian buyers are therefore looking for LNG cargoes for delivery in April and even May, Bloomberg reported this week, adding Taiwan, Thailand, South Korea, and Bangladesh were among those looking to secure two months’ worth of liquefied gas. Some of these have been successful in securing their immediate supply. Others, such as India, not so much. Per the Bloomberg report, Indian LNG buyers have been looking for alternative cargoes, with GAIL only managing to find one cargo for March delivery after several unsuccessful attempts.
Things are not going to get better anytime soon, either. The Financial Times reported this week that the price difference between Europe and Asia has changed in favor of Europe, meaning LNG tankers are now moving increasingly to Europe. Asian gas prices have subsided somewhat, while European gas prices are on the rise, nearing 70 euro per MWh at the start of this week, which is twice as high as the price of gas before the war began.
According to the FT report, Taiwan is among the most vulnerable Asian gas importers because it relies on Qatari gas for 30% of its supply. South Korea and Japan are better off, with their Qatari gas reliance at 15% for South Korea and just 5% for Japan. Japan imports a lot more LNG from Australia than it does from Qatar, which puts it in a more comfortable position than some neighbors.
What we are seeing, then, is a repeat of 2022 but worse, because a fifth of global LNG supply is offline. Chances are competition between Asia and Europe will intensify in the coming months—unless Asia simply falls back on coal, which is what a lot of Asian gas importers did back in 2022 and 2023 when LNG prices became too high for them.
Yet there is a twist this time around. Europeans are not in a real rush to buy all the LNG they can get their hands off, which has improved availability for Asian buyers. The reasons, per analysts cited by the Financial Times, have to do with greater availability of U.S. LNG on the spot market and EU methane regulations.
The availability of U.S. LNG on the spot market seems to have made some buyers in Europe sort of complacent in the belief that they could start buying more later in the year, after the Middle East disruption is over. This may sound like a pretty dangerous assumption, but it is an assumption some in Europe appear to have made. The methane regulation has served as an additional deterrent to panic buying, as buyers have no idea whether the EU would penalize them for buying non-compliant LNG. Asia, as luck and politics would have it, does not care about methane leaks. Asia cares about gas.
Related:
