Poland's biggest energy company is pulling out of a long-term gas deal with Qatar. Orlen holds two supply contracts with QatarEnergy, and on Tuesday it gave notice to cancel one of them, saying the Gulf producer cannot deliver.
No other buyer is known to have cancelled a long-term QatarEnergy contract since the conflict with Iran cut the country's exports, Reuters reported.
What Orlen cancelled
The contract dates from 2009, when it was signed by PGNiG, the Polish gas company that is now part of Orlen. It was for 1 million tonnes of liquefied natural gas (LNG) each year, with deliveries scheduled through 2034. LNG is natural gas cooled into a liquid so it can travel by ship.
Orlen estimates the agreement is worth about 570 million euros in 2026. It does not lapse at once. A 60-day notice period applies first.
Orlen said it acted "due to an ongoing force majeure resulting in an inability to meet contractual delivery obligations." Force majeure is a legal clause that frees a supplier from its duties when events outside its control stop it from delivering.
QatarEnergy invoked that clause in March, after Iranian drones hit its Ras Laffan LNG complex and the Strait of Hormuz became hard for tankers to pass. Orlen was still counting on a restart a month ago, when it said Qatari cargoes should return by mid-November. QatarEnergy gave no immediate response when asked about the cancellation.
Price played a part
The price in the cancelled contract is tied to crude oil, an older model in the LNG trade. Traders reckon the formula works out to roughly 16% of the Brent price, Reuters reported.
That has become expensive. Brent recently fell to its lowest level since August, yet according to analyst estimates carried by Reuters, the Qatari deal still costs more than twice as much as long-term LNG contracts from the United States.
The second deal with QatarEnergy remains. It runs to 2034 as well, for as much as 1 million tonnes annually, and is priced against gas market benchmarks, not oil.
Where the gas comes from now
Orlen said Poland's supply is not at risk. "The decision to terminate the Agreement does not affect the security of gas supplies," the company said. It pointed to its own gas production and its other long-term purchase agreements, which it says meet all of the group's demand.
Two sources stand out:
- United States: Orlen has a long-term purchase deal with Venture Global, whose Plaquemines plant in Louisiana started commercial deliveries from its first phase this month
- Norway: gas pumped on the Norwegian continental shelf also feeds Orlen's supply
US export plants are running close to their limits. Monday's gas intake at the country's LNG plants reached 20.4 billion cubic feet, a daily record, according to preliminary LSEG data reported by Reuters. Almost all of the plants were at full capacity or just below it. US natural gas futures are up more than 2% today.
What to watch
The open question is whether other buyers follow. Reuters noted that cheaper LNG is now within reach for many of them, which could make older oil-linked contracts harder to defend. For now, QatarEnergy's force majeure remains in place.