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Summary
- LNG price surge and supply chain disruption hit poorer Asian buyers hardest, Ydreos says
- Reliability concerns prompt some Asian countries to reconsider LNG in energy transition plans
- Gulf producers’ reputations impacted, with Qatar’s supply reliability now under scrutiny
(Reuters) – A Middle East ceasefire signals de-escalation, but the conflict has scarred the global LNG industry, denting confidence in Gulf suppliers and raising doubts among Asian buyers, particularly poorer countries, over the fuel’s reliability and affordability, a top industry executive said.
LNG prices have, as of last week, soared over 80% since the U.S. and Israel launched strikes on Iran on February 28, closing the Strait of Hormuz, a narrow waterway that normally carries about a fifth of global LNG supplies, to most ships.
“This was not a supply crisis. This was a supply chain crisis,” said Menelaos Ydreos, secretary general of the International Gas Union, which has more than 140 members worldwide, representing more than 90% of the world’s gas market.
“Where you have choke points and you have geopolitical events that occur, it impacts security of supply,” he said.
Global gas supply remains ample. But LNG depends on complex infrastructure, specialised ships and predictable transit routes. When those are disrupted, cargoes flow to buyers able to pay more, leaving poorer importers exposed, he said.
That dynamic is critical for Asia, where LNG demand growth has relied on the fuel’s reputation as a stable bridge away from coal.
“The less affluent countries (in Asia) have been hit with a price crisis twice now in four years,” he said, referring to the LNG price spike that followed Russia’s invasion of Ukraine.
This has raised questions over LNG’s role as a reliable transition fuel. In March, a Vietnamese company said it wants to ditch a plan to build the country’s largest LNG-fired power plant and embark on a renewable energy project instead, as the Iran war has boosted the risk of the fuel becoming too expensive.
GULF REPUTATION AFFECTED
The conflict has dented the standing of Gulf energy producers far beyond LNG. Concentration risk in the region has come into sharper focus for oil, gas, petrochemicals and fertilizers, he said.
“The reputation of a reliable area for energy in the world, whether it’s oil or gas or petrochemicals or fertilizers, all of a sudden gives some concern,” Ydreos said.
Damage to LNG infrastructure has reinforced those worries. Restarting plants takes time, and repairs to heavily damaged facilities could take years. Even partial recovery will face constraints from shipping capacity and high freight costs.
The reputational impact is particularly sensitive for Qatar, the world’s second-largest LNG exporter, whose supply record has long been a cornerstone of Asian energy security.
“Over 30 years, Qatar had an incredible record of on-time delivery of cargoes…second to none, but now there are questions,” he said.
Reporting by Marwa Rashad; Editing by Nia Williams
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