JAKARTA - A series of force majeure from LNG suppliers has put pressure on energy supply in Asia. The Straits Times, Thursday, March 12, reported that this condition brought Singapore closer to a situation when the country might have to take steps to maintain fuel supplies that support almost half of its power plants.
The latest pressure came from Shell. The company told customers in Asia that there were unforeseen circumstances that disrupted the fulfillment of supply contracts. This move followed QatarEnergy's decision to halt operations at Ras Laffan, the world's largest LNG export facility, after the facility was attacked amid the Middle East conflict.
Hostilities in the region effectively closed the Strait of Hormuz. This route carries one-fifth of the world's oil supplies and 19 percent of LNG supplies. According to Wood Mackenzie, the closure of Hormuz removes 1.5 million tons of LNG supplies per week from the global market, equivalent to 19 percent of world exports.
Asia is the most affected region. About 90 percent of LNG exports from Qatar and the United Arab Emirates have flowed to Asia. In 2024, Singapore imported about 6.7 million tons of LNG. A number of analysts estimate that 15 to 20 percent of the country's LNG imports still come from the Middle East.
The Straits Times also noted that Pavilion Energy, now owned by Shell, has a supply contract of up to 1.8 million tons of LNG per year from Qatar. The problem is not only supply, but also delivery. As of March 11, Lloyd's List estimated that 17 LNG vessels were stuck in the Persian Gulf, while a number of empty vessels were still held outside Hormuz.
Asian countries are now trying to get LNG cargoes from the United States and Nigeria. This competition also contributes to rising prices. In the past week, Indonesia's Chandra Asri Pacific also declared force majeure due to lack of naphtha.
Singapore Energy Minister Tan See Leng, as quoted by The Straits Times, said the government had prepared steps to maintain energy sufficiency, including a mixed gas and diesel reserve. However, the amount of reserves was not announced. Industry sources said that if Hormuz remained closed in the next few weeks, Singapore would likely have to use its energy reserves.
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