Qatar Sends First LNG Shipment Through Hormuz Since War Started

0:00 What do we know about how this LNG tanker was able to get through?

0:03 Did they work with the Iranians?

0:05 Did they take that northern path?

0:06 What do we know, and and how are they doing?

0:10 You know, there aren't a ton of details available.

0:12 We're trying to figure it out at the moment,

0:14 but they did take the northern route,

0:15 which indicates that there was some sort of coordination with Iran.

0:18 It is very you know,

0:20 there have been many attempts by Qatar to send LNG through the Strait Of Hormuz.

0:24 And you've seen I've seen multiple ship kinda make its way

0:27 towards the Strait on the western side and then turn around,

0:31 seemingly because they weren't able to get permission or the or the situation

0:35 became potentially too dangerous for the ship to go through.

0:38 The fact that this ship went through is quite symbolic.

0:40 It's the first LNG shipment to get out.

0:43 Qatar supplies 20 global supply of LNG globally.

0:46 And and so this does mean something

0:49 in the sense that potentially more ships could get out.

0:52 There could be more easing.

0:53 It's going to Pakistan, which is a big deal.

0:55 Not only are they a key intermediary between The US and Iran talks,

0:59 but also Pakistan is dealing with an acute gas shortage.

1:02 They get 99% of their LNG from Qatar last year.

1:05 They've gotten basically nothing, so far since the started.

1:08 So this shipment will really help them,

1:10 especially as weather is gonna be getting hotter over the next few weeks.

1:14 That being said, it is symbolic.

1:16 It doesn't really change the balance.

1:18 On a normal day, before the war,

1:21 three shipments of LNG would go through the West

1:23 East Side Of Hormuz on a daily basis.

1:25 It would be exit exported out of the Persian Gulf.

1:28 So this one single shipment doesn't mean

1:31 that there's going to be an avalanche supply.

1:33 In fact, the other ships within the Persian Gulf don't really appear

1:36 that they're kinda making their way to that waterway at the moment.

1:39 So it's we're definitely in a wait and see situation,

1:42 but it it there is a bit, at least, celebration on the Pakistani side.

1:46 Stephen, pull back the curtain a bit and just talk to us

1:49 about how you track the movements of these ships in the strait.

1:52 Obviously, this popped up based on the data

1:54 that we've been going through here at at Bloomberg.

1:57 What gives us visibility into the movements that we're seeing in in the strait?

2:00 And and what you mentioned that we had, you know,

2:02 three ships going through prior to this this crisis beginning.

2:05 What are the indications going to be that we get back to kind

2:08 of a more normal flow of of ships here in the future?

2:11 Yeah.

2:11 So what what's really interesting is that global ships,

2:14 they have these things called AIS.

2:15 So you basically, we're tracking them with satellites.

2:18 They they send signals up to the satellites so we can see where they are.

2:22 For a lot of the oil fleet, for example, ships go dark.

2:25 Either if they're if they're carrying Iranian crude

2:28 or or if they're going through the strait,

2:31 sometimes they'll go dark to hide their position.

2:34 For LNG, because of the nature of the LNG market,

2:37 these ships are very expensive, and it's, a lot of the players know each other.

2:41 So there isn't much of a dark market,

2:43 and so it's much easier to track LNG because the ships are are large,

2:47 and usually they don't turn their their transmission off.

2:51 Now that being said, this while this Qatari ship did go through

2:55 with its transmission on, there were two ships by ADNOC,

2:58 which is also an LNG exporter, in the in the Persian Gulf.

3:02 They sent two of their LNG ships dark.

3:04 So it actually made it's making it more difficult

3:06 to track the amount of LNG ships going through.

3:09 But because there are only about 700 or 800 ships in in in the global,

3:14 fleet compared to thousands for oil, it is much easier to track,

3:17 and we do can still see that there aren't that many going through.

3:20 Now looking at where we're gonna be going over the next few weeks,

3:23 it will take a while to get back up to normal LNG export levels.

3:27 Even oil export levels according to Aramco,

3:29 they just had their earnings, and they said the same thing.

3:32 It will even if there's peace,

3:34 it will take months for the traffic to get back to normal

3:37 for the for the market to take it back to normal.

3:39 That's for a few reasons.

3:40 One, the ships are all over the world.

3:43 Two, will will cruise and ships be comfortable going

3:45 through the straight even if there is a peace deal?

3:47 Are they worried if there will be, you know,

3:50 sudden an escalation, there will be a drone going through?

3:53 The risk premium in the region will always be high will be high,

3:57 at least for the for the near term.

3:59 And then lastly, for LNG, Qatar's LNG export facility in Raslan was

4:03 actually damaged in March by Iranian missiles.

4:06 17% of its capacity is actually offline.

4:08 It'll take about three to five years for it to come back.

4:12 So even if there were normal traffic, the ships were in the right places,

4:17 LNG supply isn't going to be back to the prewar level for for years.

4:20 That's exactly the question I was just about to ask you.

4:23 Is it it loaded at that facility earlier this month,

4:25 but, I was wondering if production,

4:27 what rate production was at, but, obviously, just answer that.

4:29 So before we let you go, I do wanna ask you,

4:32 about China because crude imports fell 20% in April.

4:36 That's the lowest level since 2022.

4:38 About half of Chinese supply, as you know, comes from The Middle East.

4:41 Talk to us a little bit about what China

4:44 has done to insulate itself from this exact scenario,

4:46 but it's not a perfect system,

4:47 and how long can they last given the hit to their energy supply?

4:52 You know, I think China, for for much of the last decade,

4:56 has cared so much about energy security,

4:58 and they've they've diversified in so many different ways.

5:01 I I could go you know, I we could talk for an hour about what they've done,

5:05 but let's just look at oil, for example.

5:07 They've they've actually been increasing their domestic oil production.

5:10 They're also very strategic with with their reserves.

5:13 A lot of last year, you know,

5:15 we were talking about run rates being sort of low at at Chinese refineries,

5:19 and yet their imports for crude were so high

5:21 because they were filling up their their strategic reserves.

5:24 When oil and Brent was around $60, $70, the Chinese were buying.

5:27 So they actually have a lot of strategic reserves there as well.

5:31 They've limited the amount of of fuel that they that they're also exported.

5:35 You know, it's been going on and off.

5:37 In the early days of the war,

5:39 they asked the refiners to kind of cut back on exports there.

5:42 And at the same time,

5:44 when you look at their how they consume oil, that's also shifting.

5:47 You know, it's this is more of a long term story,

5:50 but, you know, the EV boom and the electric truck boom,

5:52 everything in in in China means that they're going

5:55 to be depending less and less on fuel in the future.

5:57 Now in the immediate term, there are some pressure points.

5:59 Mhmm.

6:00 And and I think one of them still is natural gas.

6:03 30% of their LNG came from Qatar last year.

6:05 And while the country itself also, again,

6:07 like oil is very insulated, they've got domestic gas supply.

6:11 They've got inventories.

6:12 They've also got, pipeline imports from Russia.

6:14 The LNG, actually does play a somewhat

6:17 key role in the Guangdong region of China,

6:20 that region is basically China's factory.

6:22 It might not be well known to the rest of the world,

6:25 but it's basically it's got the economic power of South Korea.

6:28 It's huge.

6:29 And because of its location on on China's Eastern Coast,

6:32 they do import quite a bit of LNG for for power

6:35 production as well as use in pet chems and other other industries.

6:38 And so if it starts to get really hot, for example Mhmm.

6:43 This summer and if the, if there's a draining of of hydro facilities,

6:47 then you could see a crunch in China for gas if

6:50 they're not able to get what they're getting from The Middle East.

6:52 Likewise, also for oil to an extent.