QatarEnergy Halts Downstream Activity

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Written by Daniel Graeber for IIR Energy Intelligence (Sugar Land, Texas)

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Summary

After halting all LNG work due to the war, QatarEnergy said Tuesday it was now suspending its downstream activity. The conflict is spreading quickly and undermining energy security in Europe due to higher commodity prices.

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Qatari Industrial Cities Struck Monday

The war in the Middle East spread quickly to engulf the energy sector, with QatarEnergy saying Tuesday it halted all downstream activity following a drone attack that curbed its LNG capabilities.

"Further to the decision by QatarEnergy to stop production of liquefied natural gas (LNG) and associated products, QatarEnergy is stopping the production of some downstream products in the State of Qatar, including urea, polymers, methanol, aluminum and other products," the company said Tuesday.

On Monday, the company said military attacks on the industrial cities of Mesaieed and Ras Laffan in Qatar forced it to stop producing LNG and associated products.

Alongside the United States and Australia, Qatar is among the largest producers of LNG in the world, with its access to Middle East waters offering a trade advantage.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project Database can learn more about the Qatari LNG sector--including capacities, investment values and necessary equipment--from this comprehensive list.

QatarEnergy's North Field East LNG project has an installed capacity of 41.2 million metric tons per annum (MTPA). That rivals the Sabine Pass facility in Louisiana, operated by Cheniere Energy and the largest U.S. LNG export facility, with a nameplate capacity of 30 MTPA.

The official Qatar News Agency on Tuesday added that debris from an intercepted drone caused a fire at the Port of Fujairah, among the busiest located along the volatile Straits of Hormuz.

The U.K. Maritime Trade Operations (UKMTO) Center has notified mariners of a handful of incidents in and around the Persian Gulf and near the mouth of the Red Sea. On Monday, UKTMO reported that a vessel was hit by two unknown projectiles at the Port of Bahrain, causing a fire onboard.

Contrary to early analysis suggesting Iran wouldn't cut off its own trade arteries, the nation's military on Monday said the strategic waterway was effectively closed and that vessels traversing the Strait of Hormuz would be set "ablaze," according to Al Jazeera.

The interruption to gas flows is having a dramatic impact on the broader markets. The wholesale price for natural gas at the Dutch Title Transfer Facility, which serves as a European benchmark, is up nearly 80% so far in March, putting the bloc's storage to the test.

Analysis from Rystad Energy on Tuesday suggested a short-term conflict with no significant damage to energy infrastructure could curb global LNG supplies by as much as 4.3%, which could be a best-case scenario. The amount of feed gas supporting U.S. exports of LNG, however, were running at about 18 billion cubic feet per day (Bcf/d) so far in March, some 12% above federal estimates for the year.

Elsewhere, IIR Energy recently notified clients that Saudi Arabia was forced to close refinery activity following military strikes. On Tuesday, various media reports said the Iranian military hit the U.S. embassy in Riyadh.

Energy Markets Roiled

The price for Brent crude oil, the global benchmark, is up nearly 15% so far this week, trading at around $83 per barrel early in the Tuesday session. That's the highest level since July 2024, overtaking the spike from brief U.S.-Israeli military action against Iran last year.

Vessel-tracking data, meanwhile, show a huge crowd of vessels parked outside the Strait of Hormuz in Fujairah. The crude oil tanker Cypress was shown by the service Vessel Finder as leaving the Port of Basra early Tuesday, meanwhile. Shipping companies from Maersk to Hapag-Lloyd, for their part, said they were reviewing their routing options as the conflict unfolds.

With Israel now targeting Lebanon and the Iranian proxy Hezbollah, the conflict is spreading quickly with no end game in sight. The United States, meanwhile, is advocating for regime change after the weekend killing of Iran Supreme Leader Ali Khamanei.

Looking at past efforts at regime change in conflicts such as Afghanistan, Iraq and Libya, Seth Jones, the director of the international security program at the Center for Strategic and International Studies (CSIS), said the Iranian conflict is quickly looking like a difficult exercise.

"Those wars persisted for years if not decades after that, you know, and we saw civil wars in all three cases and insurgencies," he said. "So trying to do that without a meaningful ground presence I think is going to be virtually impossible."

By the Numbers

• 80% spike in Dutch TTF
• $83 per barrel Brent

Key Takeaways

• Qatari energy sector halted by war.
• Iran closes the Strait of Hormuz.

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About IIR News Intelligence
IIR News Intelligence is a trusted source of news for the industrial process and energy markets, powered by Industrial Info Resources' Global Market Intelligence (GMI).

About Industrial Info Resources
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 250,000 current and future projects worth $30.2 Trillion (USD).