Competition from more flexible liquefied natural gas (LNG) contracts offered by the United States, the United Arab Emirates (UAE), and Oman is posing a challenge to Qatar’s long-standing dominance in the LNG market in north Asia, industry sources told Reuters.
Qatar, one of the world’s top three LNG exporters alongside the U.S. and Australia, is facing difficulties as rival sellers offer shorter-term contracts and more flexible cargo destinations, sources explained.
Unlike Qatar, whose LNG supply is linked to oil prices, U.S., UAE, and Omani contracts are tied to the U.S. benchmark Henry Hub, which typically results in lower prices. Additionally, non-Qatari LNG cargoes are often not bound by strict destination clauses, allowing buyers to resell them freely.
Buyers in countries like South Korea and Japan are increasingly drawn to these flexible, short-term deals, according to sources.
However, Qatar’s insistence on including destination clauses in its agreements has caused a deadlock in negotiations with buyers in South Korea and Japan, they said.
With buyers seeking to diversify their LNG sources, the UAE’s state-owned ADNOC has seized the opportunity to fill the gap, a trade source noted.
Qatar is working on a major expansion plan to increase its LNG export capacity by 85% by 2030. QatarEnergy’s North Field West project, part of this effort, aims to develop the world’s largest natural gas field, which Qatar shares with Iran. The project follows the discovery of significant additional gas reserves.
In recent months, Qatar has secured several long-term LNG supply deals, including 27-year agreements with countries in Europe and Asia such as Italy, France, the Netherlands, and China.
Last year, QatarEnergy CEO Saad Sherida Al-Kaabi announced that by 2029, “40% of all new LNG entering the market will be from QatarEnergy.”
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