QatarEnergy has agreed to purchase liquefied natural gas from the United States, a move that underscores how the Iran war has disrupted Gulf exports and shifted global demand toward American suppliers. The deal, announced Thursday, involves QatarEnergy buying 4 million metric tons of LNG annually from Cheniere Energy through 2054. Pricing is indexed to the U.S. Henry Hub price plus a fixed fee, with deliveries expected to begin in the 2030s.
Cheniere CEO Jack Fusco stated in a release that the company looks forward to supplying QatarEnergy from its Sabine Pass and Corpus Christi facilities into the second half of the century. While the volume represents less than 1% of the global LNG trade, which exceeds 400 million metric tons, Alex Munton, director of global gas and LNG at Rapidan Energy, noted that this is among the largest individual U.S. deals currently seen in the market.
The agreement highlights a dramatic reversal in Qatar's position. Before the conflict with Iran, Qatar was the world's second-largest LNG exporter, trailing only the United States. However, shipments have collapsed since Iran bombed Qatar's key production facility at Ras Laffan eight months ago. The attack damaged two production lines, eliminating approximately 17% of Qatar's export capacity. Qatar's Energy Minister Saad Sherida Al-Kaabi said repairs will take about three years. Since the March attack, Qatar has declared force majeure every month, citing uncontrollable events that prevent contract fulfillment.
Al-Kaabi told reporters on the sidelines of the U.N. General Assembly in September that the attack dealt a significant blow to production capabilities for the coming years. He explained that Qatar is currently exporting very little LNG because it cannot access the Strait of Hormuz. The minister described current transit as minimal, noting that only a tiny number of vessels are crossing the strait and that the volume is too small to register as a measurable percentage point.
Uncertainty remains regarding security conditions in the Strait of Hormuz once repairs are complete. Munton observed that the long-term contract with Cheniere suggests Qatar fears freedom of navigation may not return to normal if Iran continues attacking tankers. Because LNG is fundamentally a waterborne product requiring seaborne routes, Munton argued that Qatar is effectively stuck without access to Hormuz.
To manage this disruption, QatarEnergy is expanding its trading business through new U.S. supply contracts. Manav Gupta, a UBS analyst, noted in a client report that a $3 billion loan secured earlier this month from Chinese banks could help QatarEnergy honor international delivery commitments by purchasing more U.S. LNG. Unnamed sources told Reuters that Venture Global is also in advanced talks with QatarEnergy to supply 3 million metric tons annually.
The market has reacted positively to these developments. Cheniere and Venture Global shares have gained 26% and 40%, respectively, since the war began. Gupta said the deal disproves bearish arguments that Cheniere would struggle to secure incremental sales needed for capacity expansion. UBS maintains a $340 price target for Cheniere, implying 18% upside from Thursday's close. Broader Wall Street sentiment remains bullish, with nearly 90% of analysts covering Cheniere rating it a buy and an average price target of $314 implying about 9% upside. For Venture Global, nearly 60% of analysts recommend a buy, with an average target of $17 suggesting approximately 35% upside.
Munton concluded that the U.S. is becoming disproportionately large in global LNG market share due to extensive construction activity and buyer demand for supply diversification.