Liquefied Natural Gas (LNG) carrier [AFP=Yonhap]QatarEnergy (QE), Qatar's state-owned energy company, announced on the 19th (local time) that it may declare "force majeure" for years on long-term supply contracts with countries including South Korea, due to the attack on major liquefied natural gas (LNG) facilities.

Saad Al-Kaabi, CEO of QatarEnergy, said in an interview with Reuters on the same day, "We may have to declare force majeure for up to five years on long-term LNG supply contracts heading to South Korea, China, Italy, and Belgium."

He added that 17% of the company's LNG export capacity was damaged by the attack, and it is estimated that it will take 3 to 5 years to recover.

South Korea is one of the largest importers of LNG from Qatar, bringing in 9 to 10 million tons annually. The long-term contract with Qatar is for 6.1 million tons per year. According to Korea Gas Corporation, South Korea's reliance on Qatar is less than 20% thanks to a significant increase in imports from the United States and Australia through diversification of its LNG supply chain.

Korea Gas Corporation stated that it currently holds inventory levels exceeding its mandatory reserve requirements, ensuring sufficient capacity to respond to supply and demand crises until the end of the year. A representative from Korea Gas Corporation said, "We are reviewing step-by-step emergency response measures for supply and demand and are preparing for a prolonged situation in cooperation with the government and related organizations."

However, if QatarEnergy actually declares force majeure and South Korea cannot import LNG for five years, the deficit will primarily need to be filled from the spot market, where prices are higher than long-term contracts, impacting gas bills for both industries and households.

CEO Al-Kaabi stated, "We never imagined we would face such an attack, especially from a brotherly Muslim nation (Iran) during Ramadan." He emphasized, "First and foremost, hostile acts must cease for production to resume."

Ras Laffan Industrial City, Qatar [AFP=Yonhap]

This is interpreted to mean that physical recovery efforts are impossible as long as the threat of further attacks from Iran and regional military conflicts continue.

According to QatarEnergy, two out of the total 14 LNG production trains and one of the two Gas-to-Liquids (GTL) facilities were directly damaged in the attack by Iran.

Consequently, the reduction in LNG production is projected to be 12.8 million tons per year, a substantial amount representing approximately 17% of Qatar's total LNG export capacity.

CEO Al-Kaabi stated, "The annual revenue loss from the three damaged facilities alone amounts to approximately $20 billion (about 30 trillion won)," and vehemently criticized, "These national critical infrastructure facilities, which cost $26 billion to build years ago, should never be targets of attack."

The reduction is expected to extend to by-product exports such as condensate (-24%), LPG (-13%), and helium (-14%), in addition to LNG, raising concerns about supply instability across the global petrochemical and advanced industries.

The previous day, Israel had bombed South Pars, Iran's largest gas field in the south, prompting Iran to retaliate with air strikes on energy facilities in Gulf oil-producing countries like Qatar, the UAE, and Saudi Arabia.

CEO Al-Kaabi also added that ExxonMobil is a partner in the damaged LNG production trains affected by the Iranian attack.

He explained that ExxonMobil holds a 34% stake in the damaged LNG production train S4 and a 30% stake in S6, with QatarEnergy owning the remaining shares.