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Market Chatter: LNG Buyers Seek Better Terms From Qatar, UAE

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Liquefied natural gas buyers from Asia and Europe intend to ask Qatar and the UAE to lower prices and offer more supply guarantees as insurance costs rise for cargoes crossing the Strait of Hormuz, Reuters reported Thursday.

The Iran war has dented the reputation of the Gulf producers as reliable suppliers, significantly hurting their negotiating position. Qatar and UAE together account for almost one-fifth of global LNG export volumes and rely almost completely on the strait.

While Qatar offers among the most competitive prices due to its low production costs, UAE provides flexible terms. Buyers say higher risks and insurance costs will help them negotiate lower costs and greater flexibility in the future, the report said, based on comments from buyers, traders and industry executives.

Some recent long-term LNG contracts from the two countries have been priced at 12.3% of the Brent crude price compared with 12.6%-12.7% pre-war, indicating the buyers' intention to factor in higher regional risks, an industry source said.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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