Analysts Warn Of Long-term LNG Market Shift, Dismiss Immediate Supply Crisis Fears

RIYADH: Following QatarEnergy’s announcement that missile strikes have knocked out 17 percent of the country’s liquefied natural gas export capacity, energy analysts are split between warning of a structural market shift and downplaying the risk of an immediate supply crunch.

The attacks on Ras Laffan Industrial City on March 18, damaged two major LNG trains— a blow estimated to cost $20 billion annually in lost revenue and take up to five years to repair, according to CEO Saad Al-Kaabi.

While the immediate market reaction saw price spikes — with those in Europe skyrocketing as much as 35 percent on ‌Thursday — analysts noted that prices remain below recent highs, suggesting that traders are betting on demand destruction and alternative supply to fill the gap.

Jan-Eric Fahnrich, senior analyst in gas and LNG Research at Rystad Energy, described the incident as a turning point for the market. “This is a directional shift for the gas market: from expecting more supply flexibility over time to confronting tighter balances and greater infrastructure risk,” he said.

Fahnrich emphasized that the lasting impact may extend beyond the lost volume. “What matters now is not only the volume lost, but the precedent set— once critical Gulf energy infrastructure is seen as vulnerable, buyers will price that risk for longer than the initial outage itself.”

He noted that any market correction will likely come from “price-led demand adjustment” rather than rapid supply-side replacement, adding that the margin of safety in the global LNG market has “narrowed materially.” 

The analyst also suggested the incident could delay Qatar’s North Field expansion plans due to pressure on labor and materials, potentially postponing an anticipated period of oversupply.

In contrast, Norbert Rucker, head of economics and next generation research at Julius Baer, struck a more measured tone, arguing that the market has the tools to absorb the shock.

“The outage corresponds to roughly 3 percent of global supplies,” Rucker noted, pointing to a roughly 10 percent capacity expansion expected from new terminals in North America and Africa through early 2027.

“Given the ongoing structural, broader shifts, we believe prices around €40 ($46.20) are sufficient to keep natural gas supplies in balance,” he said.

Rucker added that Europe is not at risk, and that while the anticipated “LNG wave” has been delayed for this year, demand curtailments— particularly from Asia— will help balance the market. “China’s gas production is surging, coal supplies remain sufficient in Asia, renewables investments are booming, and nuclear is ramping up,” he said.

South Korean authorities echoed that sentiment, downplaying concerns about supply disruptions despite being one of the affected buyers. With Qatar supplying around 14 percent of South Korea’s LNG imports, the country’s Industry Ministry said alternative sources are available and that state-run Korea Gas Corp. holds inventory levels above mandatory requirements.

Analyst Alex Siow from ICIS said Kogas is unlikely to face difficulties replacing Qatari volumes with spot purchases, noting the utility is less price-sensitive than other buyers. South Korea has already moved to increase coal and nuclear output to reduce reliance on gas-fired power.

June Goh, senior oil market analyst at Sparta Commodities, offered a sobering view on the timeline for repairs, writing on X that the damaged air separation unit is a “mega critical engineering beast” that will take three to four years to rebuild. “The world needs to learn how to be less reliant on LNG the hard way. And immediately,” she said.

Susan Sakmar, director at Flec LNG, pointed to a potential silver lining, noting on X that both damaged trains are joint ventures with ExxonMobil. “Good thing QatarEnergy and Exxon are partners on Golden Pass LNG, which is starting up soon!” she wrote, referencing the US export project that could help offset some of the lost supply.