New development on the gas squeeze

This report follows our earlier story on the Dutch TTF benchmark reaching €91 as EU gas storage hit record lows. Since then QatarEnergy has extended its force majeure to the end of December and the TTF price has broken above €100 for the first time since December 2022. Read the earlier report

DOHA / MILAN — State-owned QatarEnergy has extended the force majeure on its liquefied natural gas (LNG) deliveries until the end of December 2026, prolonging supply disruptions caused by the Iran war, according to Reuters. The suspension has been in force since April, after the war that began in late February disrupted LNG flows through the Strait of Hormuz.

Source: Reuters via Egypt Oil & Gas

Italy's Edison said in a message published on the platform of Italy's energy markets manager GME that QatarEnergy had extended its force majeure notices from an earlier deadline in December, affecting three additional cargoes for the Adriatic LNG terminal. Edison's update puts the total at 38 cargoes subject to force majeure — about 5 billion cubic metres of gas — of which it had replaced 27 cargoes, about 2.7 billion cubic metres, by October 27. Under a 25-year agreement in place since 2009, Edison is contracted to receive 6.4 billion cubic metres a year from QatarEnergy, equivalent to about 10% of Italy's annual gas consumption.

Source: Reuters via Egypt Oil & Gas

€100+Dutch TTF per MWh on Wednesday — first time since December 2022
38 cargoesEdison cargoes now under force majeure, about 5 bcm of gas
End of Dec 2026New force majeure deadline, extended from early December
<75%EU gas storage level heading into winter

Europe's benchmark breaks €100

European gas rallied further on Wednesday, with the front-month Dutch TTF contract settling 4.85% higher and breaking above €100 per megawatt-hour for the first time since 2022, ING's commodities analysts wrote, adding that reported QatarEnergy extensions for several buyers mean significant LNG disruption is creeping deeper into the heating season. EU gas storage is just shy of 75% full, forecasts point to colder-than-usual weather in north-west Europe from next week, and unplanned outages in Norway add to supply concerns, ING said.

Source: ING Commodities Feed via EuropeSays

South Asia pays the spot price

Clients in Pakistan and Bangladesh have also been notified that force majeure will remain in effect through the end of the year, according to sources familiar with the matter and state-run Petrobangla, Reuters reported. Petrobangla chairman Abdul Mannan said the company was seeking additional spot cargoes to offset the shortfall, but warned higher procurement costs were increasing Bangladesh's import bill and pressuring its finances. QatarEnergy has also extended force majeure on November LNG supplies to India's Petronet LNG, according to a source familiar with the matter.

Source: Reuters via Egypt Oil & Gas

For Pakistan, OilPrice reported, citing Reuters, that securing winter LNG on the spot market could cost in excess of US$1 billion — yaani 100 crore US dollars — with the government planning to import 10 spot cargoes at about double the price of its long-term Qatari contracts, as Asian spot LNG prices surged to four-year highs and Hormuz LNG flows had not recovered in any meaningful way.

Source: OilPrice (Reuters reporting)