Poland’s Orlen becomes first buyer to cancel QatarEnergy LNG contract

Résumé détaillé

Poland’s Orlen has terminated a long-term liquefied natural gas supply contract with QatarEnergy, blaming the Qatari company’s inability to deliver cargoes as the Iran war…

Poland’s Orlen has terminated a long-term liquefied natural gas supply contract with QatarEnergy, blaming the Qatari company’s inability to deliver cargoes as the Iran war continues to disrupt shipments through the Strait of Hormuz.

Orlen exercised its right to end the agreement because of an “ongoing force majeure” that had left QatarEnergy unable to meet its delivery obligations, it said in a regulatory filing late on Tuesday.

The contract, for 1 million tonnes of LNG a year priced against crude oil, had an estimated value of €570 million ($637 million) this year. It was signed in 2009, with deliveries starting in 2016, and was due to run until 2034.

The agreement will remain in force for 60 days following the notice of termination. Orlen will keep a second contract with QatarEnergy, linked to gas prices, for up to 1 million tonnes a year until 2034.

The company said the decision “does not affect the security of gas supplies” to Poland, which has its own gasfields and other long-term supply agreements.

It is the first cancellation by a customer of QatarEnergy, which supplied about a fifth of the world’s LNG before the war, Bloomberg reported.

Missile strikes in March badly damaged two of the 14 production units at Qatar’s main LNG export plant, forcing QatarEnergy to declare force majeure on shipments for the first time.

Force majeure is a legal clause that allows suppliers to miss deliveries because of events beyond their control. Prolonged use of the clause typically gives buyers the right to walk away from a contract.

QatarEnergy has extended the measure every month, with its latest notice covering shipments until the end of the year, forcing buyers in Europe and Asia to turn to spot cargoes at prices that are at their highest in years.

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