How the Iran War is transforming the liquefied natural gas industry

Polish energy group Orlen ended its long-time contract with QatarEnergy this week, which was supposed to last until 2034. Wartime disruptions have made the company unable to deliver shipments of liquefied natural gas.

It’s concrete evidence of how war and geopolitical conflict are restructuring the global energy business.

The U.S. and Qatar are two of the world’s biggest suppliers of LNG. And Qatar’s continuing challenges around getting LNG out of the Strait of Hormuz could be huge for U.S. LNG suppliers.

“We have supply growth. We have facility growth,” said Tom Seng, an energy finance professor at Texas Christian University.

There’s already new business coming to U.S. LNG facilities. Last month it was actually QatarEnergy that signed multi-decade agreements to buy LNG coming off the U.S. Gulf Coast.

“They want to buy supply from the U.S. and and that's a way of holding on to the contracts that they have,” Seng said.

The U.S. is well-positioned to be a place where countries diversify their source of LNG, said Ken Medlock, senior director of the Center for Energy Studies at Rice University.

“We look back … five years from now, 10 years from now, we're going to see a very different global energy landscape,” he said. “We're on the precipice of this, so get ready. It's going to be an interesting ride.”

Medlock said Canada and Latin America could also see new LNG contracts.

But some countries may want to diversify away from LNG as a fuel source altogether, said Anne-Sophie Corbeau, a global research scholar at the Center on Global Energy Policy at Columbia University.

“It was very interesting in Thailand to hear people talking more about ‘OK, maybe we need to have more domestic gas production. Maybe we need to electrify more,’” she said.

Some countries may also turn towards more coal. And that’s why she thinks the global LNG trade will grow, but could end up growing less than expected.