US LNG Floods Asian Markets as Qatar's Export Routes are Disrupted by US-Iran War

The ongoing US-Iran war has severely impacted Qatar's liquefied natural gas (LNG) export routes, prompting the country to seek alternative sources. In a significant shift, South Korea is now importing more LNG from the United States than from Qatar.

According to energy industry sources, QatarEnergy, Qatar's state LNG supplier, is discussing an annual import of 2-3 million tons of US LNG. This move comes as a response to the destruction of its domestic LNG production facilities in the war, which has made it difficult for Qatar to honor long-term supply contracts.

The damage to Qatar's LNG production capacity amounts to 12.8 million tons, roughly 17% of total facilities and equivalent to 3% of global LNG supply. Restoration is expected to take three to five years.

The US has stepped in to cover the Qatari shortfall, with U.S. LNG exports increasing by 23% in the first half of this year compared to the same period last year. Exports to Asia reached an all-time high of 10.9 million tons in the second quarter alone.

South Korean companies that directly import LNG for power generation are reaping windfall gains due to cheaper American gas and elevated power sales prices. An official at one direct importer noted, 'Most of our LNG import volumes are locked in through long-term contracts at fixed prices... If a company has long-term contracts for expensive Qatari LNG, reducing those volumes and importing U.S. LNG instead can lower costs.'

The appeal of American LNG for direct importers comes down to price. According to the Korea International Trade Association, the 2024 per-ton import price of US LNG was $549, compared to $745 for Qatari LNG.