QatarEnergy Locks In 7 mtpa of US LNG as a Hormuz Hedge

QatarEnergy has signed contracts for 7 million tonnes per year of US LNG in the past two weeks — a 20-year deal for 3 mtpa from Woodside's US facilities signed Thursday, plus up to 4 mtpa from Cheniere Energy's Sabine Pass and Corpus Christi plants running through 2054.

CEO Saad Sherida Al-Kaabi, also Qatar's minister of state for energy affairs, told Reuters in Doha the purchases are a deliberate hedge. If the Strait of Hormuz closes again, gas prices spike, and QatarEnergy's newly bought volumes gain value it can monetize.

"In a scenario where you have a closure of the strait, which is the true contingency that we're looking to have, you'd immediately see a spike in gas price and you'll be able to generate revenue for QatarEnergy that otherwise wouldn't be generated," Kaabi said.

Why Qatar is buying the very product it sells

The logic is straightforward. Qatar supplies roughly a fifth of global LNG exports, and every molecule leaves through Hormuz. Iran's effective closure of the chokepoint — a route carrying a fifth of the world's oil and LNG — followed the US- and Israeli-launched war that began February 28. Iranian missile strikes damaged QatarEnergy's Ras Laffan complex in March, and the company declared force majeure on March 4, since extended through the end of 2026.

The March attacks knocked out two of Ras Laffan's 14 trains, removing 12.8 mtpa of capacity — about 17% of Qatar's exports. QatarEnergy put the revenue loss at roughly $20 billion a year. Repairs will take about three years, Kaabi said.

So QatarEnergy is buying US volumes cheap and, in a crisis, selling into higher European prices. "You can imagine the arbitrage you could make, and that would make up some of the loss," he said. The US Navy has separately advised vessels to avoid unnecessary Hormuz transits.

What does this change for LNG markets and shippers?

Quite a lot. The strategy requires zero capital spending — no pipelines, no new LNG trains. Kaabi said the idea is his, took shape about three months ago, and follows a study that ruled out pipeline options. "As we have seen, pipelines and pump stations or compression stations can be also targets," he noted.

The plan leans on QatarEnergy's fleet of about 200 LNG tankers — the world's largest — and on QatarEnergy Trading, which Kaabi said will soon become the world's largest gas trading platform.

One thing it doesn't change: long-term customer contracts. Those are point-to-point, tied to specific terminals and destinations, so QatarEnergy cannot substitute US volumes for Qatari ones. Kaabi said customers have been understanding. US deliveries under the Cheniere deals won't start until 2031 anyway.

More deals are coming

"There's more to come," Kaabi said. He expects additional 20- to 25-year agreements with US and other producers this year, and the target is "much higher" than 7 mtpa, though he declined to give a figure. QatarEnergy is talking to "everybody," including Venture Global, which Reuters reported is in advanced talks to supply 3 mtpa.

Repairs, restarts and the expansion pipeline

The wider picture is less grim than the March damage suggested. Kaabi said no announced project has been canceled. Ras Laffan's 77 mtpa base remains, and Qatar's plan to expand output to 142 mtpa stands, with all contracts awarded. North Field East, South and West are all proceeding.

The first North Field train should start up in Q1 next year — though production would need a US-Iran peace deal in place. Qatar could restart full LNG production within a week of a peace deal, provided ships are available, but output would cap at about 83% of pre-war levels until the damaged trains return. The Pearl gas-to-liquids plant, the Shell joint venture also hit in March, should be back by Q1 2027.

Kaabi added he has met Iran's acting petroleum minister twice in recent weeks to explore oil and gas cooperation once the war ends — which suggests Doha is hedging politically as well as commercially.