Han Media: Qatar's Liquefied Natural Gas Recovery Will Take 3-5 Years... Canceling Long-term Contracts with South Korea and Others Is Inevitable

The War on Energy Facilities is Escalating, Even After the War Ends, the "Impact" Will Continue

Israel attacked Iran's largest natural gas field, South Pars. In retaliation, Iran bombed Qatar's Ras Laffan. Qatar produces 20% of the world's liquefied natural gas (LNG). This war has escalated into a rare precedent "energy war" crisis. The large-scale natural gas processing facilities that were attacked are difficult to build from an engineering perspective, and it is expected that repairs will take several years. Therefore, people are worried that even after the war ends, the energy crisis may last for years, and the competition among countries for limited resources may endlessly drive up energy prices.

On the 18th, Israel attacked Iran's core energy source - the South Pars gas field. Explosions occurred at multiple natural gas processing facilities in the gas field. According to The Wall Street Journal (WSJ), this area accounts for about 19% of global liquefied natural gas (LNG) supply. For Iran, this place is as important as a lifeline. About 90% of Iran's electricity production relies on the natural gas from the South Pars gas field as fuel, and it is also a major source of income for Iran's hardline Islamic Revolutionary Guard Corps (IRGC). The problem is that Qatar shares this resource with Iran. The South Pars gas field is connected to Qatar's North Field, and the natural gas produced in the North Field is processed into LNG at Ras Laffan and exported to South Korea, Japan, Europe, etc. Qatar is one of the world's major LNG exporters.

After Israel attacked the South Pars gas field, Iran attacked the Ras Laffan liquefied natural gas facility where the natural gas produced from the North Field was liquefied for export. According to The Financial Times (FT), Ras Laffan is a huge industrial park three times the size of Paris, France, costing billions of dollars and taking 30 years to build. Ras Laffan has 14 natural gas liquefaction units, capable of producing 77 million tons of liquefied natural gas annually. Ann Sophie Corvo, a researcher at the Center on Global Energy Policy at Columbia University, told The Financial Times, "This is a doomsday scenario we hoped would not happen."

Analysts believe that direct attacks on energy facilities could have a greater impact than the oil price surge caused by blocking the Strait of Hormuz. If the blockade of the Strait of Hormuz is lifted, the issue can be resolved. However, if the facilities are damaged, it will take a long time to repair. Martin Senyo, head of natural gas pricing at the global energy market research company Argus Media, said, "The time required to repair energy facilities is longer than the duration of the war, which will lead to a new dimension of energy shock exceeding the blockade of the Strait of Hormuz." The New York Times stated, "Attacks on natural gas facilities may make Persian Gulf countries harder to recover production after the war."

In fact, concerns are gradually becoming reality. The operator of Ras Laffan, state-owned Qatar Energy, told Reuters, "Repairing the damaged parts of the two liquefied natural gas plants will take 3-5 years, and for the long-term contracts with South Korea, Italy, Belgium, and China, we can only declare 'force majeure'." This effectively means canceling the contracts. Demand remains unchanged, but supply is significantly reduced, leading to soaring prices. The Financial Times stated, "Europe, which relied more on liquefied natural gas after Russia reduced gas exports during the Ukraine war, now will have to directly compete with countries like South Korea and Japan for limited resources."

If direct strikes on energy facilities in the Gulf region expand, the damage will be unimaginable. US President Donald Trump categorically denied his involvement in this Israeli attack, but he warned, "If Qatar's liquefied natural gas is attacked again, I will not hesitate to blow up Iran's natural gas fields."

Source: Chosun Ilbo

Original: toutiao.com/article/1860146165561353/

Statement: This article represents the views of the author alone.