Global LNG Sector Rocked by War

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

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Summary

The amount of feed gas supporting LNG export volumes is high in the U.S., the largest exporter in the world. An Israeli strike on a Middle East gas field showcases the fragility of the global sector, however.

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U.S. LNG Levels High

Feed gas levels running to U.S. export terminals for liquefied natural gas (LNG) remained strong on Thursday, but it might not be enough to offset the mounting losses due to fighting in the Middle East.

IIR Energy in its NATGAS Today report for Thursday put the amount of feed gas supporting export terminals for LNG at 19 billion cubic feet (Bcf), up from 18.3 Bcf the prior day. Routine maintenance on pipelines feeding the terminals influenced the early-week declines.

The Plaquemines, Cameron and Sabine Pass terminals were all operating above their design capacity on Thursday.

IIR is tracking dozens of U.S. projects related to the LNG sector and subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Project and Plant databases can learn more about Alaska LNG--including capacities, investment values and necessary equipment--can learn more from a detailed list of project reports.

Domestic consumption, meanwhile, is on the decline as the weather calendar switches to spring. Henry Hub, the U.S. benchmark for the wholesale price of natural gas, was trading at about $3.25 per million British thermal units, up 5.2% in morning action.

Overseas, and the situation is entirely different. The price at the Dutch Title Transfer Facility (TTF), which serves as a benchmark for the price of natural gas in Europe, was up more than 60% on Thursday amid airstrikes on key energy installations in the Middle East.

By the Numbers

• 60% spike in European natural gas prices
• 12.8 MTPA in Qatari LNG could be sidelined for years

QatarEnergy Hobbled by Middle East War

On Thursday, QatarEnergy said it already suffered "extensive damage" to its Pearl gas-to-liquids (GTL) plant and had suffered further damage to several of its LNG facilities, many of which were on fire from what the company said were missile strikes.

Subscribers can see details about the Pearl GTL facility from a detailed plant profile.

QatarEnergy already declared force majeure, a contractual clause freeing it from its obligations due to circumstances beyond its control. The largest LNG company in the world, QatarEnergy had stopped LNG production from facilities in the Ras Laffan and Mesaieed industrial cities early this month.

The attack on QatarEnergy was seemingly in response to Israeli airstrikes on Iran's South Pars natural gas field in the Persian Gulf. Iran shares that field with Qatar, where it's called North Dome. Combined, it's the largest natural gas field in the world.

Subscribers to Industrial Info's GMI database have access to details about South Pars and North Dome.

In an interview Thursday with Reuters, Saad al-Kaabi, the chief executive officer for QatarEnergy, said about 12.8 million tons per annum (MTPA) of gas in the liquid form would be sidelined for as long as five years because of the attacks.

That's a little less than half of the export capacity of Sabine Pass, operated by Cheniere Energy and the largest U.S. facility of its kind. Repair estimates are about $26 billion.

"I never in my wildest dreams would ⁠have thought that Qatar would be ... in such an attack, especially from a brotherly Muslim country in the month of Ramadan, attacking us in this way," Kaabi said. "For production to restart, first we need hostilities to cease."

U.S. President Donald Trump urged the Israeli military to avoid targeting energy infrastructure in the region. He made similar requests after Israeli forces hit fuel depots in Tehran earlier in the conflict.

But later on social media, the U.S. president said military forces would destroy the entire offshore natural gas field should Iran continue to retaliate against military aggression. Iran's military responded by saying it was ready to defend its maritime borders and would confront "any possible conspiracy by the enemies in the Persian Gulf and the Strait of Hormuz."

Key Takeaways

• Gas markets targeted in Middle East conflict
• U.S. offers conflicting messages on recent attacks

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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 News Intelligence) 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 more than 250,000 current and future projects worth $30.2 trillion (USD).