Iran attack wipes out 17% of Qatar’s LNG capacity for up to five years, QatarEnergy CEO says

Iran attack

Iranian strikes on Qatar’s energy facilities have disabled about 17 percent of the country’s liquefied natural gas export capacity, inflicting a severe blow to one of the world’s top suppliers of gas.

It could cause $20 billion in lost annual revenue damages, QatarEnergy chief Saad Sherida Al-Kaabi told Reuters last week, and disrupt supply to key markets in Europe and Asia.

Two of Qatar’s 14 LNG trains and one of its two gas-to-liquids (GTL) facilities were damaged in what Al-Kaabi said were unprecedented strikes.

The effect is expected to put a combined annual production of around 12.8 million tonnes of LNG out of action for three-to-five years, sparking fears of an extended period of instability in global energy markets.

“I never imagined, regardless of how I modeled things in my mind’s eye, that Qatar would be – Qatar and the region – under such an attack, especially coming from a Muslim country, a brotherly country during the holy month of Ramadan entered our lands and attacked us,” Al-Kaabi said.

The disruption is also likely to impact longer-term supply commitments, with QatarEnergy set to declare force majeure on liquefied natural gas contracts for as long as five years.

Deliveries to nations such as Italy, Belgium, South Korea and China may be impacted.

Al-Kaabi said that force majeure had already been declared on a shorter-term basis, but may need to be extended depending on the length of the disruption.

The fallout extends beyond LNG. Condensate exports are expected to decline by roughly 24%, and liquefied petroleum gas (LPG) production might fall by 13%.

Production of helium and naphtha are each due to fall by as much as 14% and sulphur can dip around 6%, highlighting the broader effect of the strikes on supplies.

The damaged facilities, which cost around $26 billion to build, also include ExxonMobil-partially owned assets; the company owns stakes in two of the impacted LNG trains.
QatarEnergy had previously declared force majeure on all its LNG production after initial attacks on its Ras Laffan production hub.

Al-Kaabi emphasized that production will not restart unless fighting stops.

The escalation came after Iranian attacks on Gulf energy infrastructure in response to earlier Israeli strikes on its own facilities, and represents a dramatic escalation of regional tensions that could have implications for global energy supply chains.