In a shocking development, Iranian military strikes have severely impacted Qatar's liquefied natural gas (LNG) export capabilities, resulting in an estimated $20 billion annual revenue loss and threatening energy supplies to key global markets. QatarEnergy's CEO and state minister for energy affairs, Saad al-Kaabi, revealed in an exclusive interview with Reuters that the attacks have knocked out 17% of the nation's LNG export capacity.
Unprecedented Damage to Critical Infrastructure
The assaults targeted two of Qatar's 14 LNG trains and one of its two gas-to-liquids (GTL) facilities, causing extensive damage that will sideline 12.8 million tons per year of LNG production for three to five years. Kaabi expressed disbelief, stating, "I never in my wildest dreams would have thought that Qatar would be—Qatar and the region—in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way."
Force Majeure Declared on Long-Term Contracts
As a direct consequence, state-owned QatarEnergy has been forced to declare force majeure on long-term LNG contracts for up to five years, affecting supplies to Italy, Belgium, South Korea, and China. Kaabi emphasized the gravity of the situation, noting, "These are long-term contracts that we have to declare force majeure. We already declared, but that was a shorter term. Now it's whatever the period is." This follows earlier force majeure declarations after attacks on the Ras Laffan production hub, with Kaabi stressing that production cannot restart until hostilities cease.
International Partnerships and Broader Impacts
The damaged facilities involve significant international stakes, with U.S. oil major ExxonMobil holding a 34% share in LNG train S4 and a 30% stake in train S6, while Shell is a partner in the GTL facility, which may take up to a year to repair. Train S4 impacts supplies to Italy's Edison and EDFT in Belgium, and Train S6 affects South Korea's KOGAS, EDFT, and Shell in China.
Kaabi warned that the scale of the damage has set the region back 10 to 20 years, shaking its image as a safe haven. The fallout extends beyond LNG, with Qatar's exports of condensate dropping by around 24%, liquefied petroleum gas (LPG) falling 13%, helium output declining 14%, and naphtha and sulphur both decreasing by 6%. These losses have wide-ranging implications, from LPG used in restaurants in India to helium essential for South Korea's chipmakers.
Economic and Strategic Repercussions
The damaged units, which cost approximately $26 billion to build, represent a massive financial blow. Additionally, Qatar's massive North Field expansion project has been halted, potentially delaying it for over a year. Kaabi called for global restraint, asserting, "If Israel attacked Iran, it's between Iran and Israel. It has nothing to do with us and the region. Everybody in the world, whether it's Israel, the U.S., or any other country, should stay away from oil and gas facilities."
This incident underscores the vulnerability of critical energy infrastructure in the Middle East and highlights the interconnectedness of global energy markets, with ripple effects expected across Europe and Asia for years to come.
