Qatar’s state firm QatarEnergy expects the damage to the Ras Laffan LNG complex, the world’s single largest LNG-producing facility, to cost it about $20 billion per year in lost revenue and to take up to five years to repair.
The Iranian missile attacks on Qatar’s Ras Laffan Industrial City (RLIC) earlier this week dashed hopes of quick resumption of Qatari LNG flows even if the Strait of Hormuz were to open to unimpeded and safe traffic today.
After QatarEnergy confirmed damage from Thursday’s attack, saying that “several of its Liquefied Natural Gas (LNG) facilities were the subject of missile attacks, causing sizeable fires and extensive further damage,” benchmark European, UK, and Asian gas prices soared as the market started pricing in a years-long supply crunch in a market that was thought to be headed to oversupply before the war.
About 17% of Qatar’s LNG export capacity is now effectively sidelined for years to come, tightening market balances for the rest of the decade.
The attacks damaged two LNG producing Trains 4 and 6 totaling 12.8 million tons per annum (MTPA) of production, representing approximately 17% of Qatar’s exports, QatarEnergy said, noting that supply to markets in Europe and Asia would be impacted for years to come.
“The damage sustained by the LNG facilities will take between three to five years to repair,” said QatarEnergy President and CEO, Saad Sherida Al-Kaabi, who is also Qatar’s Minister of State for Energy Affairs.
“The impact is on China, South Korea, Italy and Belgium. This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts.”
The attacks also targeted the Pearl GTL (Gas-to-Liquids) facility, a production sharing agreement operated by Shell, which converts natural gas into high-quality cleaner burning drop-in fuels and produces base oils used to make premium engine oils and lubricants, and paraffins and waxes.
“The damage caused to one of the two trains at Pearl GTL is being assessed and is expected to be offline for a minimum of one year” Al-Kaabi added.
By Tsvetana Paraskova for Oilprice.com
