Qatar has found a way to move liquefied natural gas through a strait it cannot safely use in daylight. In September, the 29 year old tanker Al Rayyan, one of the oldest vessels in the Qatari fleet, sailed out of the Gulf without transponders or lights under US Navy security assurances and transferred its cargo off Sohar in Oman to a modern carrier, the Al Mas’habiyyah, which carried it on to China, Bloomberg reported after interviewing more than two dozen traders and officials.
The run became a system. Over the four weeks that followed the first crossing, roughly 20 tankers carrying Qatari LNG exited Hormuz, and deliveries approached a third of prewar levels by the end of September. That is still a fraction of normal trade: exports between April and the end of September plunged almost 90 percent compared with the same six months last year, and Bloomberg calculates that each week without regular exports costs Qatar roughly $1 billion in lost sales. Two of Ras Laffan’s 14 production trains were damaged in the March attack and could take about three years to repair, leaving about 83 percent of capacity available.
The logistics are expensive by design. Qatar recalled tankers aged 15 years or more, for which insurance is more manageable than for new vessels costing over $300 million, chartered third party ships at freight rates about 10 times the market level, and paid crews double or triple usual wages plus bonuses to sail the strait, according to people involved in the trade. Its trading arm, QatarEnergy Trading, is separately on track to handle more than 15 million tons of LNG this year, buying US cargoes to replace lost Qatari supply and to sell at a profit.
The limits are visible. Transits have slowed again since a tanker linked to QatarEnergy was attacked last week, and analysts quoted by Bloomberg warn that extended force majeure may eventually give buyers the right to walk away or demand cheaper, more flexible terms. Qatar’s premium pricing model, built on never having declared force majeure before this year, is being renegotiated by events.