South Asia's LNG Contracts Fail as Hormuz Closes
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- QatarEnergy declared force majeure at Ras Laffan on March 4, 2026—just seven weeks after Bangladesh received its first cargo under a new 15-year supply agreement—and Iranian strikes have since knocked out approximately 17% of Qatar's LNG export capacity, with the CEO saying 12.8 million tonnes per year will be sidelined for three to five years
- Bangladesh's 15-year QatarEnergy contract, signed June 2023 with deliveries beginning January 2026, offered no protection once force majeure was invoked; the country has since closed all universities, imposed fuel caps, and stationed troops at oil depots while buying replacement LNG on the spot market at nearly three times pre-conflict prices
- Pakistan holds an excess of 177 cargoes in long-term LNG contracts through 2032, carrying a potential liability of $5.6 billion or higher—despite having accumulated an LNG surplus as recently as January 2026, before solar growth reduced gas demand
- Sri Lanka reintroduced fuel rationing and a four-day government work week to manage the energy emergency in a smaller economy with even thinner buffers than its neighbors, following its 2022 sovereign debt crisis
- Pakistan's solar expansion cushioned the crisis in a way Bangladesh's lower renewable investment did not; the IEEFA calculated that every gigawatt of solar generated in Pakistan avoids approximately $3 billion in LNG import costs over 25 years
- Gas Outlook predicted that Bangladesh, Pakistan, and Sri Lanka will be "hardest hit from the price fallout" of the Strait of Hormuz closure, given the region's near-total reliance on Gulf LNG
- South Asia's proposed LNG import capacity expansions—roughly doubling existing infrastructure in Bangladesh and Pakistan—are part of a combined $107 billion in potential gas terminal and pipeline investment that the crisis now calls into question
Why it matters: Three South Asian governments are managing emergencies while locked into long-term LNG contracts that leave them exposed to a maritime chokepoint they cannot control, with $5.6 billion in excess contracted cargoes sitting unused in Pakistan alone. The $107 billion pipeline of proposed new LNG import terminals would double the same concentration-of-supply risk that produced this crisis, making the renewable-versus-LNG investment choice the most consequential policy decision the region now faces.
