JERA says LNG prices to hold firm as Qatar repairs drag on

Global LNG Prices Stay Firm Amid Qatar Repairs and Europe Demand

Japan’s JERA, the country’s largest power generation company, expects liquefied natural gas prices to remain firm in the near term as repairs to Qatar’s war-damaged LNG facilities drag on and Europe scrambles to rebuild depleted gas stocks ahead of winter.

“Looking over the next year or so, prices may well hold up fairly well and not fall much,” JERA Chairman and Global CEO Yukio Kani told a press conference on Wednesday. Kani said it would likely take more than “two to three years” to restore some of Qatar’s LNG facilities damaged by Iranian missile strikes during the U.S.-Israel war with Iran.boereport

Qatar Repairs and Supply Constraints

Iran’s retaliatory strikes on Qatar’s Ras Laffan complex in March knocked two of fourteen LNG production trains offline, removing about 17% of the country’s export capacity. QatarEnergy CEO Saad al-Kaabi said in March that repairs would take three to five years, forcing the company to declare force majeure on long-term contracts with South Korea, Italy, Belgium, and China.spglobal

While a Reuters report on June 16 indicated QatarEnergy could restart undamaged facilities and reach full output from those plants within a month once shipping lanes normalize, the damaged trains represent a structural supply loss that will take years to resolve.reuters

Europe’s Storage Deficit

Kani also pointed to Europe’s low gas inventories as a factor supporting prices. EU underground gas storage stood at roughly 46% full as of late June, about 12 percentage points below the five-year average for this time of year. Injection rates are running below the pace needed to meet the bloc’s 80% fill target by November 1.global-energy-flow

If Europe follows through on plans to avoid Russian gas imports, it will need to secure additional LNG from the spot market, providing continued demand support, Kani said.boereport

Conflict Wind-Down and Market Recovery

The outlook comes as the U.S.-Iran conflict appears to be winding down. Washington and Tehran announced a preliminary agreement on June 15 to end hostilities and reopen the Strait of Hormuz, with a formal signing set for later that week in Switzerland. The deal extends the existing ceasefire for 60 days while parties negotiate a permanent resolution.npr

GECF Secretary General Philip Mshelbila said in April that if the conflict were resolved, global gas demand could recover within six months to a year. With a deal now in hand, demand recovery could begin materializing through the third quarter, though the pace will depend on how quickly shipping through the Strait of Hormuz fully normalizes and how long mine-clearing operations take.reuters