Exclusive | There's no easy replacement': Global LNG expert on India’s energy challenge amid Iran war

The war in the Middle East is spilling far beyond the battlefield, threatening one of the world’s most critical energy arteries. With Qatar halting LNG exports through the Strait of Hormuz—a route that carries nearly a fifth of global LNG trade—the shock is rippling across global gas markets and hitting major importers in Asia, including India. In an exclusive interview, Anne-Sophie Corbeau, a leading LNG expert and Global Research Scholar at Columbia University’s Center on Global Energy Policy, tells Firstpost that replacing the lost supply will be extremely difficult and warns that some buyers could soon be “priced out” of the market if the crisis drags on.

Edited Excerpts:

The Middle East conflict is now disrupting global energy markets, and India is already facing LNG shortages. How serious is the situation, and what is your assessment of its impact on LNG supply?

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There is a shortage of LNG very simply because there is about 20 per cent of the global LNG trade that is transiting through the Strait of Hormuz. Most LNG is from Qatar, and nothing is passing through the Strait of Hormuz. Actually, Qatar has to declare force majeure, and the facilities are shut down.  

This issue is impacting mostly Asian countries because about 85 to 90 per cent of the LNG is going towards Asia, notably towards China, but also India and then other countries such as Japan, Korea, Taiwan, Pakistan, and Bangladesh.  

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This is really, really impacting absolutely everybody. It’s going to be very difficult to replace because first of all, the market is still relatively tight. And second, there is no additional LNG that is available.  

Most of the LNG facilities are actually already running at capacity. Only upside is new facilities that have recently come to the market over the past year and they are still ramping up to capacity. However, if the crisis persists, there is a high likelihood of pricing out some individuals from the market.

The Indian government believes alternative suppliers, such as those from Mozambique and Canada, could step in to fill the supply gap. Do you think these sources can realistically offset the disruption caused by Qatar’s shutdown?

It is very difficult. Initially, we were expecting an additional 40 billion cubic meters of LNG supply to come to the market over the course of 2026. But what has disappeared right now—because of this immediate disruption—is the equivalent of about 110 billion cubic meters.

And this figure only refers to LNG. I am not even taking into account the disruptions affecting gas supplies from Israel to Egypt and Jordan. So the supply loss is significantly larger than the additional capacity that was expected to come online.

As a result, there simply is not going to be enough replacement supply in the near term.

Regarding Canada specifically, there will indeed be additional LNG (liquefied natural gas) coming from the country because some of its facilities have recently started operations and are still ramping up to full capacity. But this increase will be gradual. Additional LNG will also come from the United States, where new facilities are also expanding production.

However, even with these additions, it will be extremely difficult to compensate for the scale of the disruption caused by Qatar’s shutdown.

So from what you’re saying, it appears this crisis is unlikely to be resolved anytime soon. Is that a fair assessment?

That is exactly the key question. Right now, we are looking at two major factors.

The first is how long this situation will last, particularly how long the disruption of flows through the Strait of Hormuz will continue. There have been announcements suggesting that we might see convoys of oil and LNG cargoes moving through the strait under military escort. However, it is still unclear whether such an arrangement will actually happen and whether it will be implemented effectively. It will also depend on the shipping companies and whether they are willing to take that risk.

The second factor is whether there will be physical damage to energy installations in the region. As you know, there have already been attacks on Saudi Arabian facilities, including refineries, as well as attacks in Bahrain and Qatar, including LNG infrastructure.

This is a critical issue because if major energy infrastructure is damaged and it takes a long time to restore operations, then the crisis could be prolonged significantly.

Qatar’s energy minister says that even if the crisis ends soon, LNG production will take time to return to normal. So even if the conflict ends next week, how quickly can supplies realistically recover?

It will definitely take some time. What people need to understand is that this is not a single LNG (liquefied natural gas) facility in Qatar where you simply press a switch and everything returns to 100 percent the next day.

In reality, there are multiple LNG plants. Qatar operates 14 different LNG trains, and they need to be restarted sequentially. First, the systems have to be cooled down because LNG is produced at around minus 160 degrees Celsius. Only after that can each train be brought back online, one after another.

Because of this process, it may take a while before the entire system is fully operational again. Qatar’s LNG capacity is about 77 million tonnes per year, which represents roughly 20 percent of the global LNG market. So bringing production back to the levels seen before the disruption will not happen instantly and could take some time.

If Washington eases sanctions on Russia, could additional Russian LNG supplies help ease the current pressure in global gas markets?

I think the impact would be more significant for the oil market because a considerable amount of sanctioned Russian oil is already present in the market. However, when it comes to Russian LNG, the impact would be relatively limited.

There are currently some sanctioned LNG facilities in Russia. Two of them are relatively small, producing together around 3–4 billion cubic meters (BCM) of LNG. The larger one is Arctic LNG 2, which has been trying to send some sanctioned cargoes to only a limited number of buyers.

So if sanctions were removed, it would certainly help a little. But overall, the volumes involved are quite small. In total, we are talking about roughly 14 BCM of LNG.

When you compare that with the current disruption—which is around 110 BCM—it becomes clear that the additional supply would only cover a small portion of the gap. Moreover, some of these facilities were already operating to a certain extent last year.

So in reality, the additional supply would probably be closer to 10 BCM of LNG. It would provide some relief, but it would not significantly change the overall situation in the global LNG market.

Do you think this crisis could trigger a fresh rethink on energy security, similar to the shift we saw after the Russia–Ukraine war?

Absolutely. I think many countries may now be asking themselves whether this is a second major crisis involving natural gas and whether they want to remain so dependent on natural gas and LNG imports.

European countries, in particular, are thinking a lot about this. They were directly impacted during the 2022 crisis, and now they are feeling the effects again. Even though Europe imports relatively small volumes of LNG directly from the Gulf, it is still exposed to global gas prices, which means disruptions anywhere in the market affect them.

Some countries may begin to consider whether they should reduce reliance on natural gas and LNG altogether. Instead of transitioning from coal to natural gas and then to renewables, they might try to move directly from a mix of coal and renewables toward a much larger share of renewable energy.

However, that shift also creates another type of dependency. Many of the key components required for electrification—such as batteries, solar panels, and inverters—are largely produced in China. So in some ways, countries could end up moving from one dependency to another.

That said, there is little doubt that energy security is once again at the top of the agenda for governments around the world.

Could the current crisis push more countries to lock in long-term LNG contracts instead of relying on the volatile spot market? How might this crisis change the way countries structure LNG contracts in the future?

It really depends. Many companies and countries already have long-term contracts, for example, with Qatar. But the current situation shows that even long-term agreements have their limitations.

Qatar has been a very reliable LNG supplier for almost three decades. However, because of its geographical location, it is currently unable to export LNG even though it would like to. So the existence of a long-term contract does not necessarily guarantee uninterrupted supply in every situation.

What a long-term contract can provide is greater certainty in terms of volumes and, depending on the price indexation agreed upon, more stability in pricing. But it is not a complete guarantee.

The only situation where it can provide stronger security is when the contract is with aggregators or large trading companies. These suppliers are sometimes obligated to provide replacement volumes if their main source of supply is disrupted.

So while long-term contracts can offer more stability than the spot market, they cannot fully eliminate risks when disruptions are caused by geopolitical or logistical constraints.

Given the recurring geopolitical tensions in the Middle East, could this crisis have a lasting impact on Qatar’s LNG business? Might countries start rethinking their dependence on Gulf energy supplies even if the situation eventually stabilizes?

It will largely depend on how the crisis ends and how the exit is managed. At the moment, we do not know what the endgame will be.

For example, one possible outcome could involve political changes in Iran. If that were to happen and a more democratic government emerged, then some of the concerns about Iran using the Strait of Hormuz as a geopolitical pressure point might diminish.

But much also depends on how long the crisis lasts and how effectively Qatar manages the recovery phase. Communication will be very important. Qatar would need to clearly signal to markets and buyers that the Strait of Hormuz is open again and that LNG exports are returning to normal.

There is therefore a lot to gain from effective crisis management and clear communication. If the situation is handled well and exports resume smoothly, Qatar could maintain the trust it has built as a reliable supplier over the years.

Even with a US–Iran ceasefire, proxy attacks could keep the Strait of Hormuz unstable. How would that affect LNG markets, and could producers like Australia, Canada, or Mozambique step in to fill the gap?

That’s a very good question. First of all, when it comes to proxies that can disrupt maritime energy flows, the Houthis have already shown their capability by disrupting shipping routes through the Suez Canal region and the Red Sea. However, that is a slightly different situation.

The Suez route, while essential, is less strategically critical in the sense that ships can still go around Africa to reach Europe if necessary. That option exists for both oil and LNG shipments.

The Strait of Hormuz, however, is much more difficult to bypass. For natural gas in particular, there is essentially no alternative route, and even for oil there are very limited options to avoid passing through the strait.

The second issue relates to the future of LNG demand, which connects to your earlier question about energy security. Some countries may start thinking that natural gas and LNG are too volatile, especially after experiencing two major crises within about five years.

As a result, some governments may decide they do not want excessive exposure to LNG markets and could prioritize other fuels or energy sources instead. If that happens, it may actually reduce the urgency for new LNG suppliers to step in, even though many projects are already under construction and will still come online.

So while producers such as Australia, Canada, Mozambique, or the United States will continue expanding LNG supply because many projects are already underway, global LNG demand itself might grow more slowly than previously expected.

Large importers like China, currently the largest LNG importer in the world, may begin to reconsider their dependency on natural gas and LNG due to the risks exposed by this crisis.

Do you think countries like Mozambique or Canada could accelerate their LNG projects in response to this crisis?

In Canada, there is one LNG project already operating—LNG Canada—and two smaller projects currently under construction. There has been considerable discussion about Canada developing additional LNG capacity.

However, it is uncertain how quickly that will happen. These projects have taken a very long time to move forward, and the approval process has been quite complicated. In fact, analysts were discussing Canadian LNG projects back in the early 2010s, around the same time US LNG projects were being evaluated.

Yet Canada’s first LNG export project only started operations last year, which shows the gap between ambitions and the reality on the ground. Regulatory hurdles, financing challenges, and logistical complexities can significantly slow these developments.

In Mozambique, there are two major LNG projects under development. One of them is progressing and, based on previous timelines, could begin operations before the end of the decade.

The bigger uncertainty surrounds the TotalEnergies LNG project, which faced major setbacks following the terrorist attack in northern Mozambique in 2021. The hope is that it will also become operational by the end of the decade, but the situation there remains more complicated and uncertain.

Would it be fair to say the world is heading toward a structural LNG shortage over the next decade, with demand potentially outpacing supply?

No. Before this crisis, the consensus in the market was actually the opposite. Most analysts were expecting a period of LNG oversupply, not a shortage.

This is because there is a large amount of LNG capacity currently under construction. Significant new supply is expected to come from the United States and Qatar but also from countries such as Australia, Canada, Nigeria, and Mozambique.

So a substantial volume of LNG is scheduled to enter the market over the next few years. In fact, before the crisis, one of the key questions analysts were asking was where all this additional LNG would go.

So it’s not really a structural deficit situation?

At the moment, we are experiencing a temporary deficit because the market was already relatively tight, and now we have a major disruption affecting one of the world’s key LNG suppliers.

That is why the market currently appears constrained. However, structurally, once the situation stabilizes and LNG flows from the Middle East return to normal, the market could eventually move toward another period of supply surplus.

LNG prices are critical for global economies. In the backdrop of this crisis, do you expect prices to remain elevated for a prolonged period? And what options does India have in such a scenario?

That’s a very good question. At the moment, gas prices are quite high, although not as high as I initially expected. It is possible that the market is anticipating that flows may resume relatively soon, but we will have to see whether that actually happens.

Prices could still move higher, depending on how long the disruption lasts.

Unfortunately, India will have to compete with other major importing regions, particularly Northeast Asian countries and European buyers, to secure LNG cargoes. Because of this intense competition, the LNG that is available in the market is likely to be quite expensive.

Ultimately, it will come down to an economic decision. India—like many other countries—will have to decide whether it wants to purchase relatively expensive LNG or reduce imports and rely on other energy sources.

But do you think this crisis is likely to last for a while?

Hopefully not. This is both an oil and a gas crisis, and if oil prices remain elevated for several months, it could have a significant impact on the global economy.

In that case, the economic pressure would likely trigger some form of international response or intervention to ensure that energy flows resume and the situation begins to stabilize.