Australia’s Woodside Energy has signed a 20-year agreement to supply liquefied natural gas (LNG) to QatarEnergy from its Louisiana export project, as the blockade of the Strait of Hormuz and Iran war-related infrastructure damage disrupt output at one of the world’s largest LNG producers, apart from affecting the economy of the Gulf major, which is highly reliant on LNG exports.
The agreement benefits both parties involved.
For QatarEnergy, the deal provides a supply source outside the Gulf.
Woodside, on the other hand, gets to secure long-term buyers for its Louisiana facility, which has struggled to attract sufficient commitments.
Under the deal, Woodside will supply LNG on a free-on-board basis from the start-up of Louisiana LNG Train 2, with volumes increasing to 3 million tonnes per annum (mtpa) following the start-up of Train 3.
QatarEnergy said deliveries are expected to begin in 2030, adding that the agreement makes it the largest buyer of US LNG.
“What really strikes me is the length of the contracts. If you were just trying to fill a three- or four-year gap, you wouldn’t be signing 20-year contracts,” said Hersh Oberoi, global research director at Balfour Capital Group, while speaking with Reuters.
“Qatar is clearly treating the Hormuz risk as something that is not going away,” he stated further.
The agreement comes as QatarEnergy faces disruptions to its LNG operations amid the Middle East conflict. The company has also told some customers that it would not deliver LNG until the end of this year, according to Italian utility Edison and market sources.
LNG prices have remained near multi-year highs this year, supported by concerns over the conflict and forecasts for colder weather.
The Woodside agreement allows QatarEnergy to strengthen its access to US supplies while reducing its reliance on production and shipping routes exposed to regional disruption.
Woodside is targeting its first LNG production in 2029 from its 16.5 mtpa Louisiana export facility, which has attracted an investment of USD 17.5 billion.
However, Australia’s largest independent oil and gas producer has struggled to secure buyers for the project’s output.
Reuters reported in May that Woodside had sought liquefaction fees above US market rates.
Before the QatarEnergy agreement, Germany’s Uniper was the project’s only long-term buyer.