The global liquefied natural gas (LNG) market is experiencing shocks as the Middle East energy supply chain is being disrupted by military conflict between the United States and Iran. In particular, analysts suggest that approximately 20% of global cargo volume could be affected by disruptions to Qatar’s LNG production and potential blockades of the Strait of Hormuz.
As the United States rapidly emerges as an alternative supply source, projections indicate that Korea’s domestic shipbuilding industry could benefit from increased demand for vessels to transport this LNG.
According to industry sources on March 9, QatarEnergy, whose facilities were recently damaged by drone attacks, declared force majeure to LNG buyers and halted operations at its core production facility, the North Field. This has resulted in production disruptions affecting 77 million tons annually.
Concerns have been raised that if the shutdown continues for more than 15 days, global LNG production this year could decrease by approximately 4.3%.
The Asian market is expected to take a direct hit, as approximately 80% of Qatar’s LNG export volume is destined for Asia. Combined with transportation disruptions in the Strait of Hormuz, it has been reported that no LNG carriers have passed through the strait since the end of February.
Accordingly, LNG volumes bound for Asia this month are analyzed to sharply decline by more than half from the previous level of 5.8 MTPA.
The shortage of available vessels has led to a surge in freight rates. LNG carrier spot freight rates, which stood at 35,500 at the end of February, rose approximately six fold to $205,500 in just over a week.
Due to Qatar’s production disruptions, major Asian importing countries such as Korea, Japan, and China are increasingly likely to expand imports of U.S.-produced LNG.
Such supply chain changes are acting as a structural positive for the shipping and shipbuilding industries, driving an increase in ton-miles (cargo volume × transportation distance).
This is because the route from the U.S. Gulf Coast to Asia is significantly longer than the route from the Middle East to Asia, requiring more vessels to transport the same volume of cargo.
LNG development projects within the United States are also gaining momentum, potentially leading to large-scale orders for LNG carriers.
Order results are already materializing. HD Hyundai Heavy Industries announced on the 5th that it secured orders for four ultra-large LNG carriers with a capacity of 200,000㎥ from a U.S. shipowner.
Additionally, Australian energy company Woodside Energy is conducting a tender for newbuilding charters of up to 20 vessels to handle volumes from its Louisiana LNG project in the United States, with Korean shipyards being mentioned as potential shipbuilding sites.
An industry official stated, “If U.S. LNG exports expand due to supply disruptions in the Middle East, demand for LNG carriers could structurally increase due to longer transportation distances,” adding, “Once North American LNG projects are in full swing, the order environment for domestic shipbuilders’ LNG carriers will improve further.”
