LNG Explained: The Pipeline Gap

Unlike crude oil, which can be transported through pipelines, railways, and trucks as a liquid at ambient temperature, Liquefied Natural Gas must be cooled to minus 162 degrees Celsius to condense into a liquid for transport by specialized tanker ships. This fundamental physical constraint means there is no pipeline bypass for LNG. While Saudi Arabia can route some crude through the East-West Pipeline to the Red Sea, Qatar — the world's largest LNG exporter — has absolutely no alternative route for its gas exports. Every molecule of Qatari LNG must transit the Strait of Hormuz by ship.

This makes the LNG dimension of the Hormuz crisis qualitatively different from the crude oil dimension. For oil, there are partial workarounds: pipelines, alternative suppliers, strategic reserves. For LNG, there are none. The only mitigation is to source replacement LNG from other producers — primarily the United States, Australia, and Russia — but these sources are already operating near maximum capacity and cannot fill the gap left by Qatar's 77 million tonnes per year of export capacity.

QatarEnergy has declared force majeure on numerous LNG delivery contracts, a legal acknowledgment that it cannot fulfill its obligations due to circumstances beyond its control. This has triggered a cascading crisis in gas markets worldwide, with European nations that had been rapidly building LNG import infrastructure to replace Russian pipeline gas now finding their primary alternative source also disrupted.