QatarEnergy, the state-owned company that ranks as the world’s largest exporter of liquefied natural gas, has completed two multi-decade purchase agreements with U.S. producers within a single week. The deals secure long-term supplies from facilities on the U.S. Gulf Coast while the company’s own Ras Laffan export plant remains offline following Iranian missile strikes and restrictions on shipping through the Strait of Hormuz.
On Thursday, QatarEnergy agreed to purchase up to 3 million metric tons of LNG per year for 20 years from Woodside Energy’s Louisiana LNG project. The plant is under construction in Calcasieu Parish near Lake Charles, with first production targeted for 2029 and deliveries to QatarEnergy expected to start in 2030.
Volumes will initially come from the second liquefaction train and rise to the full contracted amount once the third train begins operations. The facility’s first phase is designed for a combined capacity of 16.5 million metric tons annually.
The prior week, QatarEnergy signed two sale-and-purchase agreements with Cheniere Energy for a total of up to 4 million metric tons per year. Two million metric tons will come from Cheniere’s Sabine Pass plant in Cameron Parish, Louisiana, and another 2 million from Corpus Christi in Texas. Deliveries are scheduled to begin in the early 2030s and continue through 2054.
One-million metric tons of the Sabine Pass volume is contingent on a final investment decision for the first phase of an expansion at that site. The cargoes will be supplied on a free-on-board basis, priced against the U.S. Henry Hub benchmark plus a fixed fee. Together, the contracts total 7 million metric tons annually.
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“We are pleased to further enhance our global supply and trading portfolio with another long-term purchase of LNG from the U.S. These additional volumes make QatarEnergy the largest buyer of LNG from the U.S. and place us in a stronger position to meet the global growing needs for LNG,” said Qatar’s energy minister and QatarEnergy president and CEO, Saad Sherida Al-Kaabi. He added that the purchases, along with the company’s joint venture with ExxonMobil in the Golden Pass LNG plant under construction in Port Arthur, Texas, support long-term growth and diversification.
The agreements come as two production units at Ras Laffan, with a combined annual capacity of 12.8 million metric tons, remain damaged. Repairs are expected to take three to five years, and QatarEnergy has estimated annual lost revenue of about $20 billion.
With traffic in the Strait of Hormuz reduced since the start of the conflict with Iran that began this past February, U.S. supply offers an alternative that does not transit the Persian Gulf.
Cheniere currently operates about 56 million metric tons of annual capacity, and both it and Venture Global are advancing expansions in Louisiana and Texas. Associated gas from the Permian Basin, where oil production reached a record 6.8 million barrels per day in September, has kept U.S. natural gas competitive, while marginal production costs there are near zero because the gas must be moved to market.
Ed Hirs, director of energy market studies at the University of Houston, noted that QatarEnergy is taking a long view of the global market and must diversify to maintain contracts while its own facilities are constrained. In Qatar the marginal cost of gas production is roughly 5 cents per thousand cubic feet, compared with estimated operating expenses of $1.50 to $1.75 in the Marcellus and Utica basins.
Louisiana has granted substantial property-tax exemptions for the projects. Woodside’s facility received a $2.8 billion exemption over 10 years and is projected to create more than 4,000 temporary construction jobs and 350 permanent positions. Cheniere’s Sabine Pass plant secured a $4.9 billion exemption over the same period.
QatarEnergy expects its own annual LNG exports to reach 110 million metric tons by 2029 once remaining capacity of 64.2 million metric tons is fully available and repairs are complete. The recent U.S. purchases form part of a broader trading strategy that uses the company’s fleet to generate revenue even if Hormuz access is interrupted again.
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[ H/T Trending Politics ]
