QatarEnergy Buys US LNG to Shield Revenue From Hormuz Closure

QatarEnergy is buying liquefied natural gas produced outside the Gulf to keep revenue coming in if the Strait of Hormuz is closed, a hedge assembled through long-term purchase contracts rather than new plants or pipelines.

The centerpiece is a 20-year agreement with Australia's Woodside Energy covering as much as 3 million metric tons a year, delivered free-on-board from Woodside's Louisiana project. Shipments are expected to start in 2030, when the second liquefaction train at the site begins operating, then climb to the full 3 million tons once a third train enters service. The contract makes QatarEnergy the largest buyer of US LNG.

For Woodside, the deal supplies a customer for a $17.5 billion project with 16.5 million metric tons of annual capacity that had struggled to sign long-term offtake. Its only previous long-term contract for the Louisiana facility was with Germany's Uniper, and the developer had been seeking liquefaction fees above prevailing US rates. Woodside is targeting first production in 2029.

Saad Sherida Al-Kaabi, QatarEnergy's president and chief executive, said volumes bought outside the region would let the company capture higher prices if Hormuz traffic stops, while still producing reasonable returns in ordinary market conditions. The purchase agreements carry no capital expenditure and cost far less than building pipelines or additional liquefaction capacity. QatarEnergy has ruled out pipelines to bypass the strait, and Al-Kaabi said infrastructure elsewhere in the region could also be attacked.

Talks are under way with a range of suppliers, including US producer Venture Global, and the company expects to sign more long-term purchase agreements before the end of 2026. It will favor the counterparties offering the best commercial terms.

Hersh Oberoi, global research director at Balfour Capital Group, said the length of the Woodside contract implies Qatar treats the Hormuz risk as lasting, not as a supply interruption that clears in three or four years.

The immediate damage is already concrete. Repairs to two production trains hit in attacks will take about three years, costing Qatar 17% of its LNG capacity in the meantime, and the Pearl gas-to-liquids plant is expected back in service by the first quarter of 2027. Italian utility Edison and market sources said some customers have been told they will get no shipments until the end of the year.

Qatar's plan to lift annual capacity to 142 million metric tons is unchanged, and Al-Kaabi said no announced project has been cancelled. He also said Qatari gas output could be fully restored within a week of a deal to end the war, provided ships are available to load it.

LNG prices are holding near multiyear highs, supported by the Middle East conflict and forecasts of colder weather. Al-Kaabi has met Iran's acting petroleum minister twice in the past two weeks to discuss possible cooperation in oil and gas after the war.

Buying cargoes abroad adds nothing to Qatar's own export capacity. It gives the company a second source of supply it can sell when its ships cannot leave the Gulf, and it hands developers such as Woodside a customer for capacity that might otherwise have waited years for a long-term commitment. The value of the hedge rises with each closure of the strait.