LNG Supply & the Strait of Hormuz
Liquefied natural gas is the forgotten casualty of a Hormuz closure. While oil bypass pipelines exist, there is no pipeline alternative for LNG. When the strait is blocked, roughly a quarter of global LNG trade simply disappears from the market.
By the Numbers
What Is LNG?
Liquefied natural gas is natural gas (mostly methane) cooled to −162°C (−260°F), which shrinks its volume by about 600 times. This makes it economical to ship by sea in specialized insulated tankers. Once it arrives at its destination, LNG is regasified and fed into local pipeline networks for power generation, heating, and industrial use.
Unlike crude oil, LNG cannot be transported through conventional pipelines over long distances without regasification infrastructure at both ends. This means there is no way to “pipe” Qatari gas around the Strait of Hormuz — it must go by ship through the strait, or it doesn't go at all.
Qatar: The World's LNG Superpower
Qatar is the world's largest or second-largest LNG exporter (competing with the US and Australia depending on the year), producing approximately 77 million tonnes per year from the massive North Field — the world's largest natural gas field, shared with Iran (which calls its portion South Pars).
Qatar is currently expanding its LNG capacity by over 60% through the North Field East and North Field South projects. Ironically, this expansion — aimed at meeting growing global demand — will make the world even more dependent on the Strait of Hormuz for gas supply. Every additional tonne of Qatari LNG capacity is another tonne that must transit the strait.
Why There Is No LNG Bypass
For crude oil, Saudi Arabia and the UAE have built pipelines that bypass Hormuz. Why not do the same for LNG? The answer comes down to physics and economics:
LNG requires specialized infrastructure
A bypass would need a liquefaction plant on one side, a cryogenic pipeline or rail system, and a loading terminal on the other side. The cost would be tens of billions of dollars.
Qatar’s geography is the problem
Qatar is a small peninsula jutting into the Persian Gulf. Its only coastline outside the Gulf faces the strait itself. There is no coast on the “other side” of Hormuz to pipe to without crossing another country.
Pipeline gas loses the LNG advantage
If you pipe natural gas overland (e.g., across Saudi Arabia to the Red Sea), you then need to re-liquefy it at the destination for onward shipping — adding enormous cost and complexity.
Political obstacles
Any overland pipeline from Qatar would cross Saudi Arabia, the UAE, or Oman. The 2017–2021 Qatar diplomatic crisis (blockade by Saudi Arabia, UAE, Bahrain, and Egypt) demonstrated the political risks of depending on neighbors for energy transit.
Most Affected LNG Importers
World’s largest LNG importer. Diversifying with Australian and US LNG, but Qatari contracts remain significant. Post-Fukushima nuclear shutdown increased gas dependency.
Second-largest LNG importer. Heavy reliance on Qatari and UAE LNG. Gas is a major power generation fuel, especially for peaking plants.
Rapidly growing LNG demand. Qatar is a top supplier. Pipeline gas from Russia and Central Asia provides partial buffer. Major long-term Qatari LNG contracts signed in 2022–2023.
Qatar is India’s single largest LNG supplier. Growing gas demand for fertilizer production and power generation. Limited alternative pipeline options.
Post-2022 pivot from Russian pipeline gas massively increased LNG imports. Qatar is now a critical EU supplier. New long-term contracts signed with Qatar and UAE.
Thailand, Singapore, and Bangladesh are growing importers. Some access to regional LNG from Australia and Malaysia reduces Hormuz exposure.
Winter vs. Summer: When a Closure Hurts Most
LNG demand is highly seasonal. A Hormuz closure in winter would be far more damaging than one in summer because natural gas is a primary heating fuel in Japan, South Korea, China, and Europe.
Winter Scenario
- • Peak heating demand across Northern Hemisphere
- • Gas storage levels declining (drawdown season)
- • Spot LNG prices already at seasonal highs
- • Risk of rolling blackouts in gas-dependent grids
- • Humanitarian impact from heating disruption
Summer Scenario
- • Lower heating demand reduces immediate pressure
- • Gas storage is being refilled (injection season)
- • Time buffer before winter shortages materialize
- • But: disrupts storage refill, creating winter crisis
- • Air conditioning demand in Asia partially offsets
Where Else Can LNG Come From?
If Qatari LNG is removed from the market, importers must turn to other sources. But global LNG supply is already tight, and alternatives have their own constraints:
World’s top exporter alongside Qatar and the US. Already largely committed under long-term contracts. Limited spare capacity.
Rapidly growing export capacity. Flexible spot cargoes can be redirected, but constrained by liquefaction terminal throughput.
Arctic LNG projects (Yamal, Arctic LNG 2). Politically complicated for Western buyers. Subject to sanctions.
Regional suppliers, largely serving Asian markets. Declining legacy fields limit growth.
Growing but constrained by infrastructure, security (Mozambique insurgency), and investment delays.
The fundamental problem is that global LNG infrastructure runs at high utilization. There is no large idle reserve of LNG capacity waiting to fill a Hormuz-sized gap. Prices would spike until demand is destroyed — meaning some buyers are priced out of the market entirely.