Israel's South Pars missile strikes knock out a fifth of Qatar's LNG production

Israel’s attack on South Pars gas complex has knocked out about a fifth of Qatar’s LNG production and export capacity and the damage will take “years” to repair, according to the state-owned operating company.

Iran’s missile strikes on Qatar’s Ras Laffan LNG complex at the start of the war sent a shock wave through the $400bn global LNG market. Israel’s attack on South Pars gas complex on March 18 has locked in some of the worst-case scenarios as the Gulf war goes from the mere disruption to the destruction of hydrocarbon flows.

The attack is a gamechanger. The national gas operator QatarEnergy confirmed on March 20 that the damage done to the Asaluyeh gas processing plant in Bushehr province in southwestern Iran that is part of the South Pars gas complex, was “serious.” Two out of 14 LNG trains are gone and export capacity has been reduced by 17%. Repairing some of the damage will take years, the company said.

The gas field is the largest in the world, six-times larger than the second largest, and supplies 20% of global LNG. The attack and shut down of QatarEnergy, which runs the field, will trigger a persistent energy crisis in multiple countries around the world causing the weakest to fall into recession or worse.

And the attacks continue. Production at Shell’s Pearl gas-to-liquids facility in Qatar has been halted following damage from a fresh attack on the Ras Laffan Industrial City, Qatar’s main energy hub, the company said Reuters reported on March 19.

“Production at Shell's Pearl gas-to-liquids facility in Qatar has stopped after an attack on the Ras Laffan Industrial City damaged the facility,” Shell said on March 19, according to Reuters. The company added that the plant, in which it holds a 100% stake, is now in a “safe state”.

The attack forms part of a broader wave of strikes. “Iranian aerial attacks since Wednesday have caused extensive damage to energy facilities in the Gulf, including to the world's largest gas plant in Qatar, and have targeted a refinery in Saudi Arabia, forced the UAE to shut gas facilities and set off fires at two Kuwaiti refineries,” Reuters reported.

Pearl GTL, one of the world’s largest facilities of its kind, processes up to 1.6bn cubic feet of gas per day into 140,000 barrels per day of liquids.

“Pearl GTL… sustained damage on one of the trains in the attacks from Wednesday,” Shell said, adding that a fire at the site was quickly contained and no injuries were reported.

The gas operating company QatarEnergy said damage extended beyond the Shell-operated facility, confirming that Israel’s South Pars attack on March 18 had inflicted significant disruption across the country’s gas infrastructure.

In an interview with Reuters, the minister and chief executive of QatarEnergy outlined the scale of the impact:

• 2 out of 14 LNG trains damaged
• 1 of 2 gas-to-liquids (GTL) facilities damaged
• 12.8mn tonnes per year of LNG offline for 3-5 years
• 17% of Qatar's total LNG export capacity gone
• $20bn annual revenue loss
• $26bn in damaged facilities

QatarEnergy is considering declaring force majeure on long-term LNG supply contracts, potentially affecting key buyers: Italy, Belgium, South Korea, and China.

“Production cannot restart until hostilities cease,” the minister said.

The disruption is also affecting other export streams:

• Condensates:      Down 24%
• LPG: Down 13%
• Naphtha:    Down 6%
• Sulphur:     Down 6%
  Helium:      Down 14%

The damaged LNG trains, identified as S4 and S6, are partially owned by ExxonMobil, with the remainder held by QatarEnergy.

The loss of 12.8mn tonnes per year—equivalent to 17% of Qatar’s LNG capacity—removes a significant volume from global markets, forcing buyers reliant on long-term Qatari supply to seek alternatives in the spot market amid already heightened competition.

“The $26bn in damaged facilities… ‘should not be attacked’,” the QatarEnergy chief executive said, highlighting the scale of losses facing the world’s largest LNG exporter.