Why the damage to Qatar’s gas infrastructure could push costs higher for years to come |
On March 19, Ras Laffan, the largest liquified natural gas (LNG) terminal in the world, supplying one-fifth of the world’s super-chilled fuel, was hit by Iranian missiles and drones. The Qatari terminal suffered substantial damage in the strikes – fires were raging across the gas-to-liquids facility within the complex, which covers 295 square kilometres – the size of a large city.
Investments worth tens if not hundreds of millions of dollars disappeared into thin air. Damage was estimated to be so extensive that QatarEnergy’s CEO, Saad Sherida al-Kaabi, said the company may have to declare a “force majeure” (non-fulfilment of orders due to circumstances outside their control) on long-term contracts. He said this could affect LNG supplies to Italy, Belgium, Korea and China “for up to five years”.
Similar to oil, gas exports from the Persian Gulf supplied about 20% of world demand. But gas (mostly methane) is a very different fuel from crude oil. To move it in liquified form, methane must be chilled to below -162°C.
But at these temperatures steel becomes brittle and shatters. So storing and transporting LNG in ships is expensive and very........