Second Qatari LNG tanker hit in Hormuz in a month as force majeure deepens — The Debate
A second attack on a Qatar-loaded LNG carrier in the Strait of Hormuz extends supply disruptions for European buyers and drives up insurance costs.
A second liquefied natural gas tanker loaded in Qatar has been struck in the Strait of Hormuz in less than a month, widening force majeure declarations and pushing up insurance costs for European buyers.
UK Maritime Trade Operations reported that an unidentified vessel was hit by a projectile off the coast of Oman. Security consultancies identified the ship as the GasLog Shanghai.
GasLog confirmed the incident occurred last Friday while the vessel was leaving the strait. All crew are safe and the tanker remains stable. The GasLog Shanghai loaded its cargo in Qatar around last Monday and stopped transmitting its position near the strait's western entrance last Friday.
It remains unclear who owned the LNG on board. QatarEnergy did not immediately respond to questions about the cargo or whether shipments were affected. GasLog is a Monaco-based LNG shipping company that manages vessels for QatarEnergy and other major gas producers.
The Strait of Hormuz is Qatar's only maritime route to international LNG markets. Qatar is the world's second-largest LNG exporter after Australia, shipping approximately 77 million tonnes a year. Almost all of it transits the strait.
The Al Rekayyat, a Qatari-owned tanker carrying LNG, was struck near the strait on 7 July, prompting a three-week pause in Qatari LNG shipments through the waterway.
Jean-Christian Heintz, managing director of Switzerland-based LNG consultancy Wideangle LNG, said the second incident was a significant setback. He said QatarEnergy faced the same risk whether it used its own fleet or third-party carriers. "Even though QatarEnergy has the choice between using ships from its own fleet or from third parties, the risk assessment might not differ," Heintz explained.
The GasLog Shanghai incident also came days after a drone struck the Energos Winter at Egypt's Damietta port, causing a fire that spread to another GasLog-managed vessel, the GasLog Salem. No party has claimed responsibility for the Damietta attack.
QatarEnergy has been operating under force majeure on some contracts since March, when Iranian attacks on the Ras Laffan industrial complex and the subsequent closure of the Strait of Hormuz disrupted production and shipping. The Ras Laffan complex, which QatarEnergy describes as the world's largest LNG production facility, accounts for the bulk of Qatar's export capacity. Two of its production trains were damaged in the March strikes.
Italian utility Edison said QatarEnergy had informed it that a further three LNG cargoes would not be delivered, extending force majeure on supplies to the company through the end of September. In total, 24 cargoes scheduled for delivery to Edison between April and the end of September, representing approximately 3 billion cubic metres of natural gas, are now subject to force majeure. Edison said it had replaced 17 of the affected cargoes and remained able to meet its commitments to customers. The utility has a 25-year supply agreement with QatarEnergy, signed in 2009, covering 6.4 billion cubic metres per year.
These repeated attacks directly threaten Europe's gas supply diversification after cutting Russian pipeline flows. Each incident raises the risk premium on every cargo transiting the strait, feeding into European hub prices ahead of winter. Edison's scramble for replacement volumes shows how quickly tightness transmits to European buyers.
Heintz said he saw little reason for QatarEnergy to lift force majeure while the security situation remained unresolved. He said each new incident was pushing shipowners, cargo traders and insurers to reassess the cost of transiting the Strait of Hormuz. "Insurance premiums, both for ships and the cargoes they carry, can only rise from this point," he explained.
Global gas markets had already adjusted significantly to the disruption but the latest incidents combined with strong European demand to refill storage ahead of winter were "certainly bullish for prices," Heintz concluded.