How Qatar's halt in natural gas production will affect global supply

The conflict in Iran has led Qatar, one of the world’s largest producers of liquified natural gas, to halt production.

About a fifth of the global liquified natural gas (LNG) supply comes through the Gulf, primarily from Qatar. As a result, natural gas prices have soared in Europe and Asia — both major importers of Qatari natural gas.

Without that supply, Asia and Europe will need to get their LNG from somewhere, said Gregory Brew, senior analyst with Eurasia Group.

“LNG buyers such as China, Japan, and South Korea will be affected by shut off in Qatari supply if the shut off lasts more than a day or two,” he said.

Brew said Europe is in an especially vulnerable position.

“Europe has relatively low natural gas inventories right now,” he said. “It's coming out of the winter months.” 

It could be a deja vu moment for Europe, said Ed Cox, editor for ICIS, a market intelligence firm. The continent, as a whole, paid high energy and heating costs in 2022 after losing its Russian natural gas supply.

“We had these huge increases after the Russian invasion of Ukraine,” Cox said. “(It) really damaged businesses in Europe and in Asia as well, hurt consumers at home, and that just speaks to the dependency that Europe has now on imported LNG.” 

If sustained for weeks, it could become a real problem for Europeans, said Anne-Sophie Corbeau, a researcher with Columbia University’s Center on Global Energy Policy.

“You are going to have an impact on gas prices. You are going to have an impact on heating bills. You are going to have an impact on electricity bills,” she said.

Corbeau said there’s no quick replacement for missing natural gas, since LNG facilities around the globe are running at capacity. That’s including facilities in the U.S., the world’s number one LNG exporter, said Tom Seng, assistant professor of energy finance at Texas Christian University.

“We’re maxed out,” he said. “You can't just boost LNG production from its current levels if you're already running at 100% in the United States. We're waiting on… additional projects to be constructed.”

More terminals that liquify natural gas are needed in order to increase LNG exports. But that export capacity is expected to grow significantly in the U.S. — not overnight, but in the next few years.

Last week, President Donald Trump and Energy Secretary Chris Wright were in Corpus Christi, Texas, when an expansion of an LNG export terminal was approved there.