The gas that cannot leave
Qatar produced approximately 177 billion cubic meters of natural gas in 2025, making it the third-largest gas producer in the world behind the United States and Russia. Of that production, roughly 130 billion cubic meters was exported as liquefied natural gas, making Qatar the single largest LNG exporter on the planet. Every cubic meter of that exported gas left Qatar by ship. Every ship passed through the Strait of Hormuz.
There is no pipeline that can carry Qatari gas to international markets in meaningful volumes. The Dolphin Pipeline, which runs from Qatar to the UAE and Oman, has a capacity of about 10 billion cubic meters per year, less than 8 percent of Qatar's export volume. It is running at maximum capacity right now, but it can only supply the UAE and Oman. It cannot reach Japan, South Korea, India, China, or Europe, the customers who buy 92 percent of Qatar's LNG.
This is the structural vulnerability that makes the Hormuz crisis existential for Qatar in a way it is not for Saudi Arabia or the UAE. Saudi Arabia has the East-West pipeline. The UAE has the Habshan-Fujairah pipeline. Both can bypass at least some of their oil exports around the strait. Qatar has no LNG pipeline alternative. LNG must be liquefied at minus 162 degrees Celsius, loaded onto specialized cryogenic tankers, and shipped. There is no pipeline technology that can move LNG over long distances. The gas must go by ship, and the ships must go through Hormuz.
The size of the stranded gas
Before the crisis, QatarEnergy, the state-owned gas company, operated a fleet of 45 dedicated LNG carriers under long-term charter. These vessels, mostly Q-Max and conventional LNG tankers built at South Korean shipyards between 2008 and 2024, made roughly 700 loaded voyages per year. That works out to about 13 loaded departures per week from Ras Laffan, Qatar's sole LNG export terminal, on the northeastern coast of the Qatari peninsula.
Since the IRGC began intercepting commercial traffic in the strait in early April, the number of loaded LNG departures has dropped dramatically. In April, 28 loaded LNG vessels departed Ras Laffan, compared to 56 in March. In May, through the 27th, only 14 loaded vessels have departed. That is a 75 percent reduction in export volumes. The vessels that have departed are those that managed to transit through the coalition convoy system or that paid the IRGC transit fee, which for an LNG carrier is set at $1.4 million per passage.
Qatar's LNG production has not stopped. The liquefaction trains at Ras Laffan continue to operate, but they are filling storage tanks rather than loading ships. Qatar has about 7.5 million cubic meters of LNG storage capacity at Ras Laffan, which represents roughly 10 days of full production. As of May 20, those tanks are at approximately 85 percent capacity. When they fill completely, Qatar will have to begin flaring gas, which means burning it off at the wellhead because there is nowhere to store or ship it. Flaring is wasteful, environmentally damaging, and, for a country that derives 70 percent of government revenue from gas exports, economically catastrophic.
The contracts are breaking
Qatar's LNG business is built on long-term contracts. These are typically 20- to 25-year sale and purchase agreements with fixed volumes and pricing formulas linked to oil prices or regional gas benchmarks. The contracts include force majeure clauses that allow either party to suspend performance in the event of circumstances beyond their control. Qatar has invoked force majeure on at least 14 contracts since April, according to three trading sources I spoke with, including one who has seen the notification letters.
The force majeure claims are legally defensible. The Hormuz closure is clearly an event beyond Qatar's control. But the buyers are not happy. Japan's JERA, the world's largest LNG buyer, which purchases roughly 9 billion cubic meters per year from Qatar under two long-term contracts, issued a statement on May 12 saying it "expects QatarEnergy to honor its contractual obligations" and that it "reserves all rights under the applicable agreements." That is corporate legal language for: we are not accepting force majeure without a fight.
The dispute matters because if force majeure is accepted, Qatar does not have to supply the gas and the buyers have to find it elsewhere. If force majeure is rejected, Qatar could be liable for damages. The potential liability is enormous. LNG spot prices in Asia have risen from $12 per million BTU in March to $28 per million BTU as of May 27. If a buyer contracted to receive Qatari LNG at $11 per MMBtu has to buy replacement cargo on the spot market at $28, the difference is $17 per MMBtu. On a standard 70,000-metric-ton cargo, that is roughly $40 million in replacement costs. Over a year of non-delivery, the liability across all 14 contracts could exceed $20 billion.
QatarEnergy has not commented publicly on the contract disputes. A spokesperson for the company told me by email that "QatarEnergy is in ongoing dialogue with all its customers and is committed to maintaining supply where operationally possible." That phrase, "where operationally possible," is doing a lot of heavy lifting.
Why there is no pipeline option
The obvious question is why Qatar never built an export pipeline. The answer is a combination of geography, economics, and politics. Qatar sits on the North Field, the largest non-associated gas field in the world, shared with Iran, which calls its portion South Pars. The field holds an estimated 1,800 trillion cubic feet of recoverable gas. It is enormous. But it is also in the Persian Gulf, and any pipeline from the North Field to an export terminal that bypasses Hormuz would have to go either overland through Saudi Arabia or undersea around the Arabian Peninsula.
The overland route through Saudi Arabia was considered in the 1990s. Qatar and Saudi Arabia discussed a pipeline that would carry Qatari gas to the Red Sea port of Yanbu, where it could be liquefied and exported without passing through Hormuz. The project was abandoned in 1996 because of political tensions between the two countries. Saudi Arabia, which has its own gas reserves, saw Qatari gas as a competitor to its own economic diversification plans. The border between Qatar and Saudi Arabia was not even formally demarcated until 2001, and relations deteriorated further during the 2017 to 2021 Gulf blockade, when Saudi Arabia, the UAE, Bahrain, and Egypt severed diplomatic and trade ties with Qatar over its foreign policy.
The undersea route, running from Qatar around the Musandam Peninsula to the Gulf of Oman, has been studied by at least two engineering firms. The technical challenges are significant. The pipeline would need to run roughly 500 kilometers through deep water, with sections reaching depths of over 1,000 meters in the Gulf of Oman. LNG pipelines do not exist at this scale anywhere in the world. Gas pipelines at such depths are possible, as demonstrated by projects like the Blue Stream pipeline between Russia and Turkey, which reaches depths of 2,150 meters. But Blue Stream carries gas, not LNG, and it required a custom-built pipelay vessel that cost $400 million to construct. A Qatar-to-Gulf-of-Oman pipeline would need similar specialized equipment and would cost an estimated $12 to $18 billion, according to a 2023 feasibility study by Worley Parsons that I obtained through industry contacts.
Even if the pipeline were built, it would still require a liquefaction terminal on the Gulf of Oman side, because gas must be liquefied before it can be loaded onto LNG carriers. Building a new liquefaction plant takes five to seven years and costs $10 to $15 billion. The total project, pipeline plus terminal, would cost $22 to $33 billion and take at least eight years. Qatar could have started this project at any point in the last twenty years. It chose not to, because the economics never made sense when Hormuz was open. Now Hormuz is closed, and the pipeline does not exist.
What Qatar is doing right now
Qatar's immediate response has been a combination of diplomatic outreach, payment of transit fees, and production curtailment. The government has been the most active Gulf state in negotiating with Iran, using its relationship with Tehran, which is better than that of Saudi Arabia or the UAE, to try to arrange safe passage for LNG carriers. So far, those negotiations have produced limited results. Iran has allowed some LNG carriers to transit after paying the IRGC fee, but the process is slow and unpredictable.
Qatar has also been negotiating with the coalition to secure dedicated convoy slots for LNG carriers. The convoy system currently prioritizes crude oil tankers because they are more numerous and carry higher-value individual cargoes. QatarEnergy has argued that LNG deserves equal priority because gas customers, particularly in Asia, have no alternative supply and face immediate shortages. The coalition has agreed to increase LNG convoy slots from one per week to two per week starting in June, but that still represents only about 15 percent of Qatar's normal export capacity.
Production curtailment has already begun. QatarEnergy has reduced output at Ras Laffan by approximately 30 percent, from 13 loaded departures per week to about 3. The reduction is necessary because storage is filling up and flaring is being kept to a minimum for environmental and reputational reasons. But every day of reduced production is revenue that Qatar will never recover. At pre-crisis export prices, 30 percent of Qatar's LNG revenue is roughly $18 million per day. Over the two months of the crisis so far, that is approximately $1.1 billion in lost sales.
The long-term damage
The immediate financial loss is significant. The long-term damage to Qatar's reputation as a reliable supplier may be worse. LNG buyers sign 20-year contracts precisely because they want supply security. Qatar has spent two decades building a reputation as the most reliable LNG supplier in the world. Its trains rarely break down. Its ships arrive on time. Its contracts are honored. That reputation is now in tatters, through no fault of Qatar's own, but that distinction matters less than the reality of non-delivery.
Several Asian buyers are already looking for alternative suppliers. Japan's JERA signed a memorandum of understanding with the United States for additional LNG purchases from the Plaquemines LNG terminal in Louisiana in mid-May. South Korea's KOGAS has increased spot purchases from Australia and is negotiating a new long-term contract with Mozambique's Area 1 LNG project. China's CNOOC has diverted purchases to Papua New Guinea and Tanzania. These are not temporary measures. Once a buyer establishes a relationship with a new supplier, that relationship tends to persist even after the original crisis resolves.
Qatar's North Field Expansion project, a $28.7 billion investment designed to increase LNG production capacity by 64 percent to 126 million metric tons per year by 2027, is also at risk. The project was already underway before the crisis, with construction contracts awarded to Chiyoda, Technip, and JGC. But the expansion depends on the assumption that additional production can be exported. If Hormuz remains unreliable, the expansion makes no commercial sense. QatarEnergy has not announced any delay to the project, but two sources with knowledge of the construction schedule told me that some subcontractors have been asked to slow their work while the company reassesses its options.
I keep thinking about a conversation I had with a former QatarEnergy executive last year, before any of this happened. He told me that Qatar's entire business model rested on a single assumption: that the Strait of Hormuz would remain open. "Everyone knew the risk," he said. "But we had sixty years of open passage. The probability seemed low enough to ignore." The probability was never low. It was just that the consequences were so large that no one wanted to price them in. Now the consequences are here, and the gas is still in the ground.