Shell declares force majeure on Qatari LNG sales to clients

Shell, one of the world’s largest liquefied natural gas (LNG) traders, has imposed force majeure on cargoes bought from QatarEnergy and sold worldwide. Three sources at Reuters reported this development. Meanwhile, Qatar, second-largest LNG exporter globally, halted production at its 77 million tonnes per annum (mtpa) facility last week and declared force majeure on LNG shipments.

Qatar’s energy sector faces an unprecedented challenge as a consequence of the ongoing conflict in the region. The country’s output has been cut off temporarily, with major buyers like TotalEnergies also receiving similar notices from Qatar. These companies have decided not to sell Qatari LNG to their customers until the facilities are operational again.

Shell and TotalEnergies, both long-term partners of QatarEnergy and participants in the North Field expansion project, are now operating under these conditions. The force majeure notice absolves them from contractual obligations due to events outside their control. Analysts suggest Shell takes 6.8 mtpa of Qatari LNG, while TotalEnergies accounts for approximately 5.2 mtpa.

QatarEnergy’s Energy Minister Saad al-Kaabi warned that it could take weeks or even months for normal deliveries to resume, regardless of the cessation of hostilities. This prolonged disruption has significant implications for energy markets worldwide.

The impact on global LNG trade is far-reaching and complex. As Qatari supply dries up, demand in markets globally continues to rise. Analysts are closely monitoring this situation to understand its broader economic ramifications. In light of these developments, stakeholders are now navigating through a challenging landscape where reliable energy supplies are increasingly uncertain.

With such substantial disruptions affecting crucial LNG export volumes from the region, it highlights the critical role Qatar plays within the global energy supply chain and underscores how regional conflicts can impact international markets significantly.