Qatar LNG pause may flip global supply surplus into deficit: Morgan Stanley

Analysts at Morgan Stanley said that if the LNG outage in Qatar extends beyond a month, the global LNG market forecast could quickly swing from surplus to deficit

A pause in liquefied natural gas (LNG) production in Qatar could turn this year’s projected supply surplus into a deficit, according to analysts at Morgan Stanley, as quoted by Bloomberg. 

In a note dated March 8, analysts said the disruption in output from the major exporter could rapidly tighten supply. They added that if the outage in Qatar extends beyond a month, the global LNG market could quickly swing from surplus to deficit. 

Before the conflict in West Asia began, Morgan Stanley had projected that the global LNG market, estimated at about 420 million tonnes a year, could face an oversupply of up to 6 million tonnes in 2026 as new projects came online. 

 

However, the conflict involving the United States (US) and Israel against Iran has forced the shutdown of Qatar's Ras Laffan LNG plant, the world’s largest LNG producer. The country’s energy minister has said restarting the facility could take weeks or even months. 

The disruption has prompted several importing nations, including India, to seek alternative sources of LNG. Prices have already surged, roughly doubling since the outage began, and could climb to $30 per million British thermal units (mBtu) or higher, according to Morgan Stanley. The prices have already surged to similar levels in India, according to a report by Business Standard published last week. 

The banking major has also projected a delay in the first LNG shipments from Qatar's North Field's expansion project to early next year, effectively cutting around 1 million tonnes from its projected global supply for this year, reported Bloomberg. 

India's stake

India is among the many nations struggling to secure energy supplies because of the ongoing conflict in the region. It faces greater vulnerability to supply disruptions in LNG and liquefied petroleum gas (LPG) than in crude oil amid the ongoing conflict. Nearly 83 per cent of the country’s LPG imports and about half of its LNG shipments pass through routes connected to the Strait of Hormuz, a narrow but critical maritime corridor between Iran and Oman. 

As Business Standard earlier reported, India is exploring alternative LNG supplies from countries such as Australia and Canada to mitigate potential disruptions. Energy companies are also holding discussions with global majors, including TotalEnergies and ExxonMobil, to secure LPG shipments. 

Meanwhile, the Centre has asked oil refiners to step up domestic LPG output to ensure adequate cooking gas supplies. Oil marketing companies have also increased domestic LPG prices by ₹60 per cylinder nationwide in view of the surging global rates.