China Looks to Curb Dependence on Qatar for Future LNG Supply
(Bloomberg) -- Chinese importers of liquefied natural gas are exploring options to reduce their reliance on Qatar, as ongoing disruptions in the Strait of Hormuz threaten a long-established supply chain.
Major state-owned buyers, including Sinopec and PetroChina Co., are in discussions with exporters of the fuel that don’t depend on the Gulf for shipments, according to people with knowledge of the matter.
The Chinese companies are looking to sign contracts for deliveries that would begin before 2030 for a term of at least a decade, the people said, declining to be named discussing a sensitive matter. Canada is one source being considered, said two of the people.
Sinopec and PetroChina didn’t immediately respond to requests for comment.
Such a shift would mark one of the clearest signs yet that the war in Iran could dramatically reshape the global LNG market, as major importers reassess their exposure to the Gulf.
Largest Customer
China, the world’s top LNG importer, is Qatar’s largest customer, and the emirate accounted for almost 30% of its supply last year. The two countries have signed some of the industry’s biggest deals in recent years, helping underpin Doha’s massive expansion plans.
China isn’t expected to try and cancel its existing agreements with Qatar, which are binding, the people said.
Another consideration for the Chinese companies is to avoid locking in supply from the US, the world’s biggest LNG exporter, due to trade tensions, the people said. Shipments between the two countries plunged after Beijing slapped tariffs on US LNG last year in retaliation to American levies on Chinese goods.
Qatar had been aiming to quickly revive production shuttered in March following Iranian attacks. However, renewed conflict in the strait has once again effectively shut the vital waterway, forcing Qatar to pause its efforts to restart Ras Laffan, the world’s largest LNG plant.
China imported only about 100,000 tons of the fuel from Qatar between April and June, according to ship-tracking data compiled by Bloomberg. That compares to 4.7 million tons over the same period last year.
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