Qatar LNG may be set to avoid Red Sea; recent cargoes only head for Asia

Three LNG-laden Qatari carriers, which paused offshore southwest of Oman in the last few days, started moving south in an apparent move to avoid the Red Sea at a time when only Asia and Middle East bound LNG ships have left the Ras Laffan terminal in recent days.

LNG market participants are closely watching the three LNG carriers, scheduled to enter the Red Sea and the Suez Canal for northbound transits, as any change in their shipping routes amid the escalating conflict in the region could have major implications for Qatar's LNG flows to Europe.

The three LNG carriers, namely Al Nuaman, Al Ghariya and Al Huwaila, were past the Gulf of Aden, which leads into the Red Sea, with sailing speed of about 17-19 knots after loading at Ras Laffan and leaving Jan. 11, according to S&P Global Commodities at Sea as of 1218 GMT on Jan. 16.

The Al Ghariya appeared to be heading southeast at a speed of 18.5 knots, while the Al Huwaila and the Al Nuaman were sailing toward south at about 17-19 knots, according to CAS.

Yet a fourth Qatari LNG carrier, the unladen Al Rekayyat, also started heading toward the south of the Red Sea en route to Qatar having paused since Jan. 12 after passing East Port Said along the Suez Canal on Jan. 10, according to CAS.

An analysis of Platts cFlow ship and commodity tracking software from S&P Global Commodity Insights also showed that only Asia and Kuwait-bound LNG ships sailed from Qatar's Ras Laffan terminal as of Jan. 15 since the Jan. 11 US-UK strikes against the Houthis in Yemen except for the three Qatari LNG carriers.

A QatarEnergy LNG spokesman did not respond to a request for comment about shipping routes as well as its shipments.

Market view

Market sources in Asia, the Middle East and Europe had mixed views about the possible destination of these Qatari LNG cargoes.

"There's uncertainty about the direction of the Qatari cargoes, as they might opt for a longer route rather than heading directly to Asia," an Asia-based LNG trader with a utility said. "It's important to note that if the cargoes are DES (delivered ex ship), changing destinations might not be feasible."

Meanwhile, several other market sources cited possibilities of Qatari LNG cargoes finding home in Asia.

A Chinese LNG importer said that there was "high chance [that] Qatar would find someone who is able to bring the cargo to Asia while giving their Atlantic cargo to Europe so that Qatar can still fulfill their selling obligation to Europe market."

Qatar's role

Qatar was the third-largest LNG exporter in 2023, after the US and Australia, according to S&P Global data. On a loaded, preboil basis, Qatar's volume was 81.67 million mt last year, against 91.16 million mt from the US and 82.59 million mt from Australia. The figures are on a loaded basis and preboil off -- liquid that turns into gas while transporting in a vessel.

The Red Sea/Suez Canal is an important conduit for LNG trade flows, connecting the Atlantic Basin with the Pacific Basin. Southbound transits of LNG carriers through the Suez Canal are key to US LNG exports to the west coast of India or Singapore and for ballast vessels returning to Qatar from Europe. In recent months, it has also been an alternative to the Panama Canal, which has been facing drought related restrictions.

A delay in LNG shipments to Europe would impact port schedules and deliveries into gas storage in the winter season and could disrupt trade flows even though inventories have been healthy this season.

Other trade flow disruptions could emerge if LNG traders sought cargo swaps to sell more Qatari LNG cargoes into Asia-Pacific while routing Atlantic Basin volumes to Europe. A jump in Qatari volumes into Asia-Pacific could put further pressure on prices in the region.