War within the Middle East: the very hefty invoice for strikes towards the gasoline fields in Qatar | EUROtoday

In two days, the conflict modified dimensions with assaults on gasoline installations. Launched on Wednesday March 18 towards Iran, they continued on Thursday with the bombing of gasoline installations in Qatar. “These attacks sparked large fires, causing serious damage to liquefied natural gas (LNG) facilities,” QatarVitality confirmed in a press release revealed on the social community X.

Consequence: gasoline costs on world markets soared, reaching their highest degree in 4 years. An improve which comes at a time when oil costs are additionally experiencing a major improve, largely because of the blockage of the Strait of Hormuz.

American-Israeli miscalculation

And it is probably not over as a result of these new Iranian strikes affirm {that a} “gas war” seems to be taking form amid the battle within the Middle East.

It was Israel who struck first on Wednesday, putting Iranian installations in South Pars, a huge gasoline area exploited by each Iran and Qatar. An assault which was strongly criticized by the Gulf monarchies, who concern a spiral of assaults towards power installations.

“This strike broke a tacit agreement that the most critical energy infrastructure should not be targeted for attack, otherwise there would be a chain reaction,” mentioned Adi Imsirovic, an power markets specialist within the division of engineering sciences on the University of Oxford.

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Israel and the United States “assumed that targeting these vital Iranian energy facilities would push Tehran to end the blockade of navigation in the Strait of Hormuz,” mentioned Khaled Fouad, head of the oil and gasoline, power division of Ocean B Holding, an funding fund.

They have been mistaken and what’s looming “is an escalation of the war where all energy infrastructures in the Gulf region, even the most critical, can be targeted, which will have much more serious economic repercussions than just the closure of the Strait of Hormuz”, provides Khaled Fouad.

Indeed, “the blockade of the strait is above all a logistical problem. Once it is reopened, the flow of oil and gas from the region can resume quite quickly. It is very different with the damage caused to Qatar’s gas installations”, explains Thijs Van de Graaf, specialist in worldwide relations and power safety at Ghent University.

Ras Laffan, an important website for international gasoline

The Ras Laffan gasoline industrial advanced in Qatar – hit by Iran – “is very important because it is responsible for a fifth of global LNG production. It is considerable”, underlines this skilled.

The Iranian assaults “resulted in the closure of the site, which means that for an unknown period of time, the world will be deprived of this Qatari gas”, notes Michael Bradshaw, specialist in power markets on the University of Warwick.

Enough to feed the issues of the markets which have a holy horror of uncertainty. Especially since we must always most likely count on… to attend a very long time earlier than seeing Qatari LNG once more. “First, we don’t really know the extent of the damage caused to the installations in Ras Laffan. Secondly, there is obviously no question of starting repairs when the risk of further bombings exists. Finally, this is very complicated work and takes time”, summarizes Michael Bradshaw, who has already had the chance to go to these installations.

Repairs to Saudi Aramco oil amenities, attacked by the Houthis in 2019, had taken months. And they promise to be much more tough with gasoline infrastructures as a result of “the pipes which transport the gas must be much more airtight and the specifications are stricter than for oil because gas is more volatile. It is also more flammable than oil and we therefore have to be even more careful,” explains Adi Imsirovic.

“After a fire in June 2022, the Freeport LNG terminal in Texas was not 100% operational for eight months. And it is not an installation the size of Ras Laffan,” underlines Thijs Van de Graaf. For the specialists interviewed, it could not be stunning to have to attend round 9 months earlier than a return to regular for the Qatari website.

In the meantime, can different LNG producers take over or is it potential to attract on reserves? “Most producers are already at their maximum capacity and it would take a long time to increase gas production,” assures Thijs Van de Graaf. As for emergency reserves, they’re a luxurious of black gold. “This is why the situation with gas is worse, because there are no stocks from which we can draw as with oil. The shock is immediate,” assures Adi Imsirovic.

There is a brand new liquefied gasoline terminal as a consequence of start operations this yr within the Gulf of Mexico, however “the extent of the loss of Qatar’s production cannot be compensated”, assures Michael Bradshaw.

Asia on the entrance line, however Europe additionally threatened

In different phrases, there will probably be victims. Starting with Asia. “Between 80% and 90% of the LNG produced in this region is intended for Asian customers,” confirms Thijs Van de Graaf. “China will be the most affected, then India and Pakistan,” lists Adi Imsirovic.

But Europe is not going to be spared. “There will be intense competition between Asian and European countries for the LNG still available, which will lead to an increase in prices,” says Khaled Fouad.

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Europe is already beneath stress as summer season approaches as a result of “gas stocks were exceptionally low in February, and the European objective of filling reserves to 90% before winter is going to be difficult to maintain. And above all costly, because we will not only have to buy more, but also more expensively,” explains Thijs Van de Graaf. Gas costs in Europe are subsequently prone to skyrocket.

This is with out making an allowance for one other variable that’s tough to anticipate: Donald Trump, his declarations and his actions. Thus, when the American president assures that he’s able to “blow up all of the Iranian fields in South Pars” if Tehran strikes Qatar once more, “it is so incendiary that it aggravates the situation. Indeed, the gas traders who hear him will say to themselves that he is ready to do it, which will increase their level of concern”, warns Adi Imsirovic.

For these key gamers within the gasoline market, there may be presently no signal suggesting that there could be “an adult in the room” able to relieving the stress, fears this skilled. On the one hand, the regime in Iran appears decided to not disappear with out burning the whole lot within the area, whereas the American president can be in one-upmanship.