Middle East LNG Disruptions Drive Buyers to Diversify Supplies

The ongoing US-Israeli war against Iran has disrupted LNG (Liquefied Natural Gas) supply from the Middle East, prompting buyers to seek greater diversity in their sourcing. This shift is driven by a desire for security and reliability in gas supplies, as well as concerns about the long-term viability of traditional sources.

LNG importers are now looking at alternative suppliers from regions such as West Africa and Indonesia, with some governments aiming to lock in contracts with sellers that have access to multiple supply routes. This diversification push could benefit projects outside of the US and Qatar, which dominate planned capacity additions.

Thai state firm PTT is actively seeking new supplies from Oman, North America, and West Africa, while its trading arm has inked a long-term deal with Norway's Equinor for LNG supply. Bangladesh, previously reliant on Qatar for most of its imports, is now exploring options in Indonesia, Australia, and China.

The loss of 36 million metric tons of supply from the Middle East due to the war has been partially offset by new capacity additions, with only a net supply loss of around 5 million tons, or 1-1.5% of global supply, this year. The additional 70-80 new LNG vessels entering service each year also provides more shipping flexibility.