Iran’s latest attack on Qatar, which severely damaged the world’s largest liquefied natural gas export facility, will cost the country’s state energy company about $20 billion of lost revenue.
The missile strikes on Ras Laffan Industrial City damaged QatarEnergy’s Trains 4 and 6, which represent a combined 12.8 million tons of annual production capacity, the company said in a statement Thursday. That accounts for about 17% of Qatar’s annual LNG exports. Repairs will take up to five years to complete.
The LNG plant had already halted production after a previous drone strike. But the latest assault was more devastating, and a lengthy shutdown will leave buyers — particularly in Asia — scrambling to make up millions of tons of lost supply.
“The impact is on China, South Korea, Italy and Belgium,” Chief Executive Officer Saad al-Kaabi said in the statement. “This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts.”
The incident marked yet another escalation in hostilities in the region and followed a string of attacks targeting oil and gas infrastructure in recent days. It also sent natural gas prices soaring, with European futures rising as much as 35% on Thursday to more than double their prewar levels. The surge underscores the long-term inflationary risks from the conflict in the Middle East, which is now well into its third week.
Ras Laffan’s Trains 4 and 6 are both joint ventures with Exxon Mobil Corp. The attacks also targeted the adjacent Pearl gas-to-liquids facility, which is operated by by Shell Plc and converts natural gas into engine oils, paraffins and waxes. Damage there is still being assessed and the plant is expected to be offline for at least one year, al-Kaabi said.
A spokesperson from South Korea’s Ministry of Trade, Industry and Resources said that, while they are closely monitoring uncertainties in the global LNG market, the country currently has no issues with gas supply. Qatar has only accounted for about 14% of its supply so far this year, and alternative import sources are available, the spokesperson added.
Hostilities will need to end for production to resume, Reuters reported earlier, citing Al-Kaabi.
QatarEnergy also said it expects to lose about 18.6 million barrels of condensates production, representing 24% of Qatari exports, 13% of its liquefied petroleum gas exports, and about 14% of helium exports.
Written by: James Herron, Priscila Azevedo Rocha, and Ruth Liao — With assistance from Soo-hyang Choi @Bloomberg
The post “Iran Strike to Cost QatarEnergy $20 Billion a Year in Sales” first appeared on Bloomberg