Qatar is finding it hard to agree new deals to supply liquefied natural gas (LNG) to Japan and South Korea as rising competition from the US and elsewhere with more flexible contract terms challenges Doha's decades-old dominance of the market, reports Reuters.
Qatar was once the top LNG supplier to Japan and South Korea, but buyers are showing preference for supplies from the United States, the United Arab Emirates and Oman. These suppliers all offer shorter-term contracts and unlike Qatar do not restrict the cargoes' final destination.
This gives buyers flexibility to sell cargoes elsewhere in the future if they no longer need the cargoes.
Negotiations between Japanese and South Korean buyers and Qatar have stalled over Qatar's insistence on destination clauses, the sources said.
"The Qataris try to achieve a lot in how they sell their LNG, in terms of retaining control over the market, whereas (others such as) the UAE's ADNOC and Oman are kind of happy to just get a good price," a senior trading source said.
"ADNOC has taken advantage of the current situation, which is that people want diversification of supply," the source added.
If state-owned QatarEnergy (QE) does not sign new agreements with Japan and South Korea - the world's second and third largest LNG importers after China - Qatar's role would be further diminished. It was knocked off the top spot as global LNG supplier by the United States in 2023.
Qatar's major 4.92 million tons-per-year deal to supply Korea Gas Corp (KOGAS) expires this year. Another 2.1 mtpa supply deal expires in 2026, official data showed.
QatarEnergy said it does not comment on market speculation.
Japan's LNG demand is falling due to nuclear reactor restarts, more renewable energy and a slowing economy. Imports fell to 66 million metric tons in 2023, from 83 tons in 2018, Japan customs data shows.
Qatar's market share in Japan fell to 4 per cent in 2023 from 12 per cent in 2018. Meanwhile, the United States' share in Japan rose to 8 per cent from 3 per cent during the same period.
Qatar's share of South Korea's market fell to 19 per cent in 2023 from 32 per cent in 2018, with Australia's share rising to 24 per cent from 19 per cent and Malaysia's growing to 13 per cent from 8 per cent in the same period, data from consultancy Energy Aspects showed.
QatarEnergy is working to sign deals to supply European and Asian buyers with fresh supplies of LNG expected to come onstream from its North Field expansion, which will boost its overall production by 85 per cent.
Chief Executive Saad Al-Kaabi said that he sees a bright future for LNG for at least 50 years, especially in Asia.
Between 2022-2023, Qatar Energy agreed a series of 27-year deals to supply Chinese buyers with new gas from North Field.
Taiwan and Kuwait have also signed up for more LNG since Qatar announced the latest expansion. But little else has been sold. Analysts estimate around 48 per cent of total Qatar LNG from North Field and its project in the United states has no contract.
Meanwhile, ADNOC and Oman have struck long-term deals with buyers from Japan, China and India.
