Poland's energy company Orlen has terminated a long-term liquefied natural gas (LNG) supply contract with QatarEnergy due to supply disruptions, marking the first known case of a partnership agreement being cancelled with the Qatari exporter since the outbreak of the Iran war.
State-owned QatarEnergy previously supplied approximately one-fifth of the world's liquefied natural gas. However, since the conflict erupted in March, shipping through the Strait of Hormuz has been disrupted, and Iranian attacks damaged its main export hub, leaving the company unable to fulfill its contractual supply obligations. QatarEnergy has not yet responded to requests for comment.
The company also holds long-term LNG supply agreements with other European energy firms, including Italy's Eni, Edison Energia, Shell, and TotalEnergies. Asian buyers include China National Petroleum Corporation, Sinopec, Pakistan State Oil, India's Reliance Industries, and Japan's JERA.
Despite severe damage to Qatar's related facilities and ongoing shipping threats in the Gulf region, tracking data from commodity analytics firm Kpler shows that activity at Qatar's Ras Laffan export terminal has recently picked up: 35 vessels docked at the terminal last month, compared to 21 vessels in September.
Orlen said on Tuesday that the reason for terminating the contract was "a continuing force majeure situation that has made it impossible to obtain cargo supplies." The agreement, originally set to run until 2034, provided for an annual supply of 1 million tonnes of LNG, with the contract valued at approximately 570 million euros (equivalent to 636.5 million US dollars) this year.
The company stated that the termination will not affect its own natural gas supply security, as production from its own gas fields and supply volumes under other long-term agreements are sufficient to meet the group's overall demand. Orlen extracts natural gas in the Norwegian Sea and has also signed a 20-year agreement with US LNG exporter Venture Global, with supplies coming from the Plaquemines terminal in Louisiana.
Another long-term agreement between Orlen and QatarEnergy, valid until 2034 with a maximum annual supply of 1 million tonnes of LNG, remains in effect.
Some analysts say Orlen's decision is seen as an important test case for QatarEnergy's entire portfolio of long-term contracts, but it is unlikely to trigger a large-scale wave of contract cancellations by Asian buyers in the short term. Kpler LNG and natural gas analyst Go Katayama noted: "While a prolonged force majeure situation gives buyers the right to exit cooperation under the contract, many Asian buyers still value their long-standing supply relationships with Qatar. This is especially true when contract pricing is competitive and alternative gas sources are costly."
Analysts believe the greater risk facing QatarEnergy in the near term may be a wave of contract renegotiations, with buyers seeking more flexible delivery terms, price concessions, and stronger supply guarantees. Kpler analysts also mentioned that the pricing mechanism of this contract may have influenced Orlen's decision to terminate. Some traders revealed that the agreement's pricing is linked to crude oil at a coefficient of approximately 16% of the crude oil price, far higher than the 12.5% coefficient common in some crude index-linked LNG contracts in recent years. Orlen has not yet commented on the pricing of the terminated contract.
Comments