Summary of Natural Gas Comment: Higher TTF on Longer Supply Disruption and Higher Fuel Switching Costs Industry Overview - The report focuses on the **natural gas industry**, specifically the impact of ongoing disruptions to **Qatari LNG exports**, which account for **20% of global LNG supply** [5][18]. Key Points and Arguments 1. **Qatari LNG Export Disruption**: - The Qatari Energy Minister indicated that the disruption to LNG exports may last longer than previously expected, requiring a complete cessation of hostilities for operations to restart, followed by a ramp-up period of weeks to months [5][18]. - Qatari exports are now expected to remain at zero through late March, with a gradual ramp-up through most of April, leading to average annualized deliveries of **18 mtpa** in March and **43 mtpa** in April, compared to earlier expectations of **74 mtpa** and **76 mtpa** respectively [5][18]. 2. **Price Forecast Adjustments**: - The disruption has led to an increase in the **2Q26 TTF price forecast** to **63 EUR/MWh** or **$22/mmBtu**, up from **45 EUR/MWh** [5][19]. - The **2Q26 JKM price forecast** has also been raised to **$23/mmBtu**, from **$16/mmBtu** [5][19]. - For 2027, the forecasts are marginally higher, with **23 EUR/MWh** for TTF (up from **21 EUR**) and **$8.30/mmBtu** for JKM (up from **$7.55/mmBtu**) [5][19]. 3. **Impact on European LNG Imports**: - The LNG supply shock is expected to lower March/April NW European LNG imports to **207 mcm/d** and **195 mcm/d**, down from **302 mcm/d** and **262 mcm/d** respectively [8][18]. - The report estimates that every two weeks of full Qatari LNG supply disruption without offsets would tighten NW European inventories by almost **4%** of storage capacity [8][9]. 4. **Fuel Switching Dynamics**: - Higher natural gas prices are likely to increase the probability of fuel switching from gas to hard coal and oil products, with potential offsets of **19 mcm/d** for coal and **12 mcm/d** for oil [18][19]. - The current gas-to-oil switching range is set between **55 EUR/MWh** and **80 EUR/MWh**, which is higher than previously expected [16][19]. 5. **Market Risks**: - Risks to the revised price forecast are two-sided; a longer-than-expected closure of the Hormuz Strait could push TTF prices towards **100 EUR/MWh**, while a quicker resolution could lead to a drop back to the coal switching range in the **40 EURs/MWh** [5][19]. 6. **US Natural Gas Prices**: - US natural gas prices are expected to remain insulated from the spike in European gas and global LNG prices due to the US being a net exporter of LNG with no spare capacity at export terminals [19]. 7. **Long-term Supply Outlook**: - The expected start date for Qatar's North Field East (NFE) train 1 has been shifted to **January 2027** from **October 2026**, lowering global LNG supply by **2.8 mtpa** on average for 2027-2030 [19]. Additional Important Information - The report emphasizes that investors should consider this analysis as one of many factors in their investment decisions [4]. - The ongoing geopolitical situation and its impact on energy supply and prices are critical considerations for market participants [5][19].