QatarEnergy, the national petroleum company of Qatar, stunned global energy markets on Wednesday by declaring force majeure and canceling its contracts to deliver liquid natural gas (LNG) to customers around the world due to attacks from Iran on its energy infrastructure.
“Force majeure” is a legal clause that allows companies to cancel their contracts because forces beyond their control have made it impossible for them to meet their obligations.
QatarEnergy said it had no choice but to invoke the clause due to “successive waves of Iranian attacks” on its LNG facilities. The move allows the company to cancel its contracts without facing financial penalties or breach-of-contract lawsuits.
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Qatar halted LNG production on Monday after Iranian drones struck two of its major production hubs in the cities of Ras Laffan and Mesaieed. QatarEnergy said on Tuesday it would also have to halt production of downstream products such as urea, polymers, methanol, and aluminum.
Qatar normally produces about 77 million tonnes of LNG per year, or about 20 percent of the world’s total supply. Most of its biggest customers are in Asia. Qatar is the largest supplier of LNG to India, for example, providing about half of its total imports.
In addition to the direct Iranian attacks on its production facilities, Qatar has a major geographical problem, which is that it can only ship its products through the Strait of Hormuz, which Iran’s terrorist Islamic Revolutionary Guard Corps has declared is “closed” to shipping.
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QatarEnergy officials said LNG production could not be restarted for at least two weeks, and it would take another two weeks after that before its normal volume of exports could resume.
“Nothing can replace Qatari LNG. If the shutdown is prolonged, it portends a larger gas market shock than in 2022 when Russian turned off pipeline gas to Europe. Gas prices could retest their record highs set in 2022,” warned MST Marquee head of energy research Saul Kavonic.
Qatar on Wednesday furiously rejected Iran’s claims that it did not intentionally target Qatari facilities.
Qatari Prime Minister Sheikh Mohammed bin Abdulrahman al-Thani, who is also the foreign minister, angrily told Iranian Foreign Minister Abbas Araghchi there was “evidence on the ground” to debunk his claims of an accidental strike.
Al-Thani denounced Iran’s actions as a “flagrant violation” of Qatar’s sovereignty, said he detected no sign of a “genuine desire for de-escalation or resolution” on Iran’s part, and vowed that Iran’s attacks “will not go unanswered.”
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