Qatar Targets Weeks to Restore LNG Production, Aims for 50% Capacity Within a Month

Stock News06-24

Qatar plans to restore normal liquefied natural gas (LNG) production from its undamaged facilities within weeks, according to statements from the country's Prime Minister.

The Ras Laffan plant, operated by QatarEnergy and the world's largest LNG export terminal, had two of its production trains damaged in early March following an attack by Iran, impacting about one-fifth of the facility's total capacity and largely halting output. The near-total closure of the Strait of Hormuz since then has severely constrained shipments.

With progress in U.S.-Iran peace talks and the prospect of a ceasefire and the strait's reopening, the company is now preparing to resume operations. The Prime Minister stated that production from unaffected facilities will return to normal within weeks, adding that teams have been mobilized for weeks and QatarEnergy is preparing to resume full operations immediately once the situation in the strait normalizes.

The return of Qatari LNG is expected to ease tight global supply. Despite a preliminary peace agreement between the U.S. and Iran, LNG prices in European and Asian markets remain above pre-conflict levels.

Qatar had previously managed to send small cargoes from the Persian Gulf to Asian buyers using security measures such as concealing tanker locations, but deliveries remained far below normal levels. Last week, informed sources indicated Qatar is planning a rapid ramp-up of LNG production once the Strait of Hormuz reopens, aiming to restore most of its export capacity within two months.

QatarEnergy has informed buyers it expects to boost output to about 50% of capacity within one month of safe navigation resuming, and to about 80% within two months. The remaining capacity, equivalent to the two damaged trains, will take years to fully repair following the March missile attack.

In the first week of the conflict, Qatar shut down the world's largest LNG facility after the Iranian attack, leading to cancelled shipments and damaging the supplier's long-established reliability. The Ras Laffan complex, which accounted for nearly a fifth of global supply last year, has been largely idle for over three months due to the effective closure of the Strait of Hormuz making large-scale shipping extremely difficult.

However, Qatar has been preparing for a swift restart since April. According to an April report, QatarEnergy has been testing equipment and performing necessary maintenance. Sources said multiple production trains have been operating at reduced capacity to deliver cargoes to neighboring countries while also being ready to increase output if needed.

The target of restoring half the production within a month is faster than some analysts and traders had expected. Shipowners, traders, and producers have been seeking clarity on the situation.

Last week, the U.S. and Iran signed an interim agreement in Switzerland, leading to the opening of the Strait of Hormuz. Data from Kayrros, the satellite monitoring unit of consultancy Energy Aspects, showed that Train 3 at Ras Laffan resumed operation last Sunday. Livia Gallarati, Energy Aspects' Global Head of Gas, suggested this likely reflected a "rotation and testing" mode rather than a direct production restart.

Kayrros data also showed some activity at a plant operated by Abu Dhabi National Oil Company (ADNOC), with one of its three production units online.

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