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With up to 20% of global LNG flows shuttered due to the ongoing blockade of the Hormuz Strait and the extensive damage of Qatar LNG infrastructure, QatarEnergy has declared force majeure on some of its long-term liquefied natural gas (LNG) supply contracts, including for customers in Italy, Belgium, South Korea and China, effectively canceling contractual obligations. That would represent as many as 90 cargoes according to Bloomberg.
The move on Tuesday comes amid ongoing production and supply disruptions caused by the United States-Israeli war on Iran.
Force majeure is a clause in contracts that allows a party to be excused from its obligations due to unforeseeable events. Petroleum companies in Kuwait and Bahrain have also recently invoked force majeure.
Last week, QatarEnergy CEO Saad al-Kaabi said an Iranian attack on Qatar's Ras Laffan gas facility wiped out about 17 percent of the country's LNG export capacity, causing an estimated $20bn in lost annual revenue and threatening supplies to Europe and Asia. Repairs are expected to take 3-5 years.
Saad al-Kaabi told the Reuters news agency that two of Qatar's 14 LNG trains, the equipment used to liquefy natural gas, and one of its two gas-to-liquids facilities were damaged in Iranian attacks.
The repairs will sideline 12.8 million tonnes of LNG production per year for three to five years.
The Iranian attack on Ras Laffan came after the Israeli military targeted Iran's offshore South Pars gasfield, the largest in the world, located off the coast of the country's southern Bushehr province.
Majed al-Ansari, spokesperson for Qatar's Ministry of Foreign Affairs, had condemned Israel for targeting South Pars, noting that the Iranian gasfield is an extension of Qatar's North Field. Qatar and other Gulf countries have also condemned Iran's continued attacks on energy infrastructure across the region, stressing that the strikes violate international law and the United Nations Charter.
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"Iran bombed Qatar’s gas field. Bangladesh closed its universities. Nobody has connected these two events.
The connection is fertilizer.
Qatar Fertiliser Company, QAFCO, is the world’s largest single-site urea producer. It supplies 14 percent of global urea per Al Jazeera. It shut down on March 4 after QatarEnergy declared force majeure on Ras Laffan, the facility that processes the gas that feeds the plant. Iran struck Ras Laffan on March 18. Seventeen percent of Qatar’s LNG capacity is offline for three to five years per QatarEnergy. The gas that made the fertilizer that grew the food is gone.
The cascade hit South Asia within days.
Bangladesh shut four of its five state-run fertilizer factories per Reuters and Al Jazeera. The country sources 65 percent of its LNG from Qatar per CRU Group. Ghorashal Polash, Chittagong Urea, Jamuna, and Ashuganj are all offline. That is 3.7 million tonnes of annual urea production lost per American Ag Network. Bangladesh then closed all public and private universities to conserve electricity per Al Jazeera. It introduced fuel rationing. It stationed troops at oil depots to prevent hoarding. A country of 170 million people is in emergency management because the gas field 4,000 kilometres away was bombed.
India cut gas supply to its fertilizer sector to 70 percent of the prior six-month average per American Ag Network. That loses 800,000 tonnes per month of urea production. IFFCO, the country’s largest producer, halted operations. Chambal took a unit offline. Kribhco shut a plant. India produces a quarter of global rice exports. Those exports depend on fertilizer that depends on gas that transited Hormuz.
Pakistan suspended LNG supply to its entire fertilizer sector per The Diplomat. Agritech shut completely. Fatima and Pak-Arab curtailed. Pakistan then closed schools and universities to conserve energy, mirroring Bangladesh’s emergency measures.
Urea prices have surged 40 percent from just under $500 to over $700 per metric tonne per Argus data cited by Al Jazeera. That is 60 percent higher than a year ago. And this is before the planting season.
Here is what nobody is connecting across domains.
Nearly half of global urea trade and 46 percent of global urea supply originates in the Gulf per Signal Group and Al Jazeera. Forty-five percent of global sulphur supply, the feedstock for phosphate fertilizer, is trapped behind the Strait of Hormuz per American Ag Network. China has imposed export restrictions on urea and NPK blends to protect domestic supply. The only major exporters left unconstrained are Russia and Morocco.
Russia. The same Russia that just sent a deputy energy minister to Sri Lanka to sell fuel. The same Russia whose refineries Ukraine is bombing. The same Russia whose Shahed drone upgrade is the weapon Iran used to hit the gas field that shut the fertilizer plant that closed the universities.
The war’s most dangerous cascade is not oil prices or carrier deployments or AWACS damage. It is the invisible line that runs from an Iranian missile through a Qatari gas field through a Bangladeshi fertilizer factory to a rice paddy that feeds a billion people. Close the strait, bomb the field, shut the plant, and the food supply of South Asia operates on a countdown that no military operation can reverse.
April 6 is eight days away. The monsoon planting season begins in June. Between those dates, the famine line will be drawn..."