QatarEnergy halts LNG output, Petronet LNG issues force majeure notice amid West Asia tensions

Amid escalating tensions in West Asia involving Iran and Israel, QatarEnergy, the world’s largest exporter of liquefied natural gas (LNG), has halted LNG production and declared force majeure to affected buyers after its energy infrastructure was targeted.

In a statement posted on X, Qatar Energy confirmed the move, saying it had stopped production of LNG and associated products due to the evolving security situation.

“Further to the announcement by QatarEnergy to stop production of liquefied natural gas (LNG) and associated products, QatarEnergy has declared Force Majeure to its affected buyers. QatarEnergy values its relationships with all of its stakeholders and will continue to communicate the latest available information,” the company said.

Qatar supplies nearly 40% of India’s LNG imports, making it a critical energy partner for the country. The disruption is linked to difficulties in shipping cargo through the Strait of Hormuz, a key global energy transit route now facing heightened security risks amid the conflict.

The Strait of Hormuz, located between Iran and Oman, is one of the world’s most important energy chokepoints and supports nearly 30% of global seaborne crude trade. Any disruption in the passage of tankers through the strait could significantly affect global gas and oil supply chains.

If the disruption persists, industrial users and city gas distribution (CGD) companies in India could face supply cuts of up to 40%, potentially affecting the availability of CNG for vehicles and piped natural gas (PNG) used for cooking in households.

A force majeure notice is a formal contractual communication issued when an unforeseen and uncontrollable event—such as war, natural disasters or geopolitical conflict—prevents a party from fulfilling its obligations. The notice temporarily suspends contractual responsibilities without liability, provided the event is external, unforeseeable and makes performance impossible.

Petronet LNG issues notice

Following the disruption, Petronet LNG Ltd (PLL)—India’s largest LNG importer—has issued a force majeure notice to QatarEnergy and its downstream offtakers, including GAIL (India) Ltd, Indian Oil Corporation Ltd (IOCL), and Bharat Petroleum Corporation Ltd (BPCL).

In a stock exchange filing, Petronet LNG said the decision was taken due to growing risks to maritime navigation in the region.

“Considering the prevailing security situation and the material risks posed to maritime navigation, the Company (Petronet LNG Limited) has issued a Force Majeure Notice to QatarEnergy in respect of its LNG tankers, namely Disha, Raahi, and Aseem,” the company said.

Petronet LNG added that vessels are currently unable to safely transit through the Strait of Hormuz to reach Ras Laffan, QatarEnergy’s LNG loading port, due to the ongoing conflict in the region.

The company said the financial impact of the force majeure situation cannot be assessed at this stage. It also noted that acts of war are excluded from business interruption insurance coverage, limiting the scope of potential claims related to the disruption.

Shares of Petronet LNG plunged nearly 12% in early trade on Wednesday, before trimming some losses to close 9.3% lower at ₹280.50 on the BSE.

Other oil and gas companies with exposure to LNG also saw sharp declines. GAIL ended the session 6.3% lower, while Indian Oil Corporation slipped 4.8%. Among city gas distributors, Mahanagar Gas fell 8.9% and Indraprastha Gas declined 5.6%.

Petronet LNG has long-term contracts to import 8.5 mtpa of LNG from Qatar and also buys additional cargoes from the spot market.

Overall, India imports around 27 mtpa of LNG from multiple sources, including Qatar and the UAE.

Rystad Energy

Norway-based energy consultancy Rystad Energy said natural gas prices have surged by more than 40% after QatarEnergy halted LNG production and shipping through the Strait of Hormuz was disrupted, removing significant supply from the global market as regional tensions escalate.

“With Qatari LNG output halted and the Strait of Hormuz closed, global LNG supply is expected to tighten sharply — a trend already reflected in recent price movements,” Rystad Energy said.

The consultancy added that the scale of supply losses will depend on the extent of infrastructure damage, which is still being assessed, as well as how long maritime traffic remains disrupted through the Strait.