Key facts
- Three LNG carriers from Qatar and the UAE transferred their cargoes to other vessels outside the Strait of Hormuz in August.
- This ship-to-ship transfer method is unusual for LNG but is being used to circumvent disruptions.
- The Strait of Hormuz remains a bottleneck for LNG traffic, impacting regional supply.
- Incidents involving LNG carriers like GasLog Shanghai and Al Rekayyat have occurred near the Strait.
- The disruptions have led to a significant increase in spot LNG prices in Asia and Europe.
Qatar and the United Arab Emirates have resorted to ship-to-ship (STS) transfers for Liquefied Natural Gas (LNG) cargoes as a measure to circumvent disruptions in the Strait of Hormuz. In August, three LNG carriers loaded from the Persian Gulf region transferred their cargoes onto other vessels offshore Oman, a practice that is highly unusual for LNG but has been employed for crude oil shipments amid escalating tensions.
The Strait of Hormuz, a critical chokepoint for global energy flows, continues to experience a standstill in LNG traffic, despite an estimated rebound in oil flows. Unlike crude oil, the shuttle-shipping of LNG through the strait and subsequent reloading via STS is significantly more complex.
Among the vessels involved were the Greek-owned GasLog Shanghai, which experienced an "incident" in late July and transferred its cargo onto the GasLog Savannah in late August. Qatar-owned Al Rekayyat, previously hit by a projectile in early July, conducted an STS transfer with the Qatar-owned tanker Tembek in mid-August, with the cargo eventually delivered to India. Additionally, ADNOC's Mraweh LNG carrier transferred its cargo to LNG Enugu offshore Oman in mid-August, en route to Japan.
These disruptions, combined with Qatar's extended force majeure on deliveries and the re-escalation of U.S.-Iran tensions, have driven Asia's spot LNG prices to a five-month high and Europe's benchmark natural gas prices to a three-and-a-half-year high this week.