Iran attack on Qatar’s liquid natural gas trains has global energy consequences

Why Iran is targeting Qatar’s liquefied natural gas trains

By Stéphanie Pappas edited by Jeanna Bryner

An Iranian attack on Qatar’s liquefied natural gas (LNG) facilities destroyed 17% of the country’s LNG export capacity, an impact from which it will take years to recover.

The impact, first reported by Reuters, is one of many now reverberating across the world following the U.S. and Israeli offensive against Iran. The Strait of Hormuz, through which 20% of the world’s LNG was transported in 2024, remains functionally closed to maritime traffic. This shutdown has already driven up oil and gas prices. Although some of the consequences might ease if the war were to end quickly, the accumulated damage to critical infrastructure pieces such as Qatar’s LNG compression trains cannot be repaired quickly, said Chuck McConnell, executive director of the Center for Carbon Management in Energy at the University of Houston.

“I would probably say it will be a shock that lasts two to three years,” McConnell says of the overall conflict and the fact that LNG processing capacity has been reduced.

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Natural gas is a fossil energy source extracted from deep underground where organic matter, under immense pressure and heat, transforms into methane and other gases over millions of years.

Gas can be transported by overland pipelines, but it is too bulky to easily transport overseas. This is why manufacturers liquefy gas in factories called trains, like the two destroyed during the recent attack on March 18 at the Ras Laffan Industrial City production site in Qatar. Inside these trains, natural gas is purified and cooled to about –260 degrees Fahrenheit (–162 degrees Celsius), below the boiling point of methane. The process requires high pressure and a series of refrigerant chemicals that cool the gas to increasingly cold temperatures with each step. The liquefied gas can then be transported, still cold and under pressure, in insulated storage tanks to terminals around the world. Because the molecules of a gas are farther apart and in thermal motion, cooling and compressing a gas into a liquid significantly reduces its volume: LNG takes up 600 times less space than natural gas at room temperature. After shipping, LNG terminals regasify the LNG for use in power plants and other applications.

The two destroyed trains processed around 12.8 million tonnes of LNG per year, QatarEnergy CEO Saad al-Kaabi told Reuters. Although the precise energy contained in this volume can vary depending on compression, 12.8 million metric tons are converted into nearly 185 million megawatt hours of electricity, which is more than New York State produces in a year.

However, the recent destruction is occurring against a backdrop of a rapidly growing natural gas market, says Michael Orlando, an economist at the University of Colorado Denver Business School. LNG has become a sought-after fuel for countries trying to move away from coal. This underlying growth could mean that natural gas prices will fall faster than oil prices, which will likely remain high for years.

Europe and Asia rely on LNG from the Middle East for electricity, heating and cooking. However, because gas is a global product, rising prices will be felt everywhere, McConnell says, including in the gas-exporting United States.

Trains are huge installations that require a lot of specialized and expensive equipment. “These are not repairs that can be done in a week or two,” he said. “These are repairs that will likely take years to replace and as such there will be a significant impact. »

Qatar also produces other liquefied gas products, such as naphtha, used both as a precursor to plastics and in gasoline production, and helium, which could affect the semiconductor industry if the war continues. Natural gas is also the main ingredient in nitrogen fertilizers, meaning any price increases will affect the cost of food globally.

There could, however, be downward pressure on gas prices in the years to come, Orlando says. Global capacity to liquefy and ship natural gas is currently expanding, with the United States and Qatar both investing in new LNG projects. Whether Qatar’s capacity comes online depends on how long the war lasts, but the United States is expected to produce an additional 19 billion cubic meters of LNG this year alone, according to statistics from the International Energy Agency (IEA). If countries in Asia and Europe turn to coal or quickly expand their renewable energy base in response to the geopolitical situation, that could further drive down the price of gas, Orlando says.

Oil, on the other hand, will likely remain expensive because demand from the oil industry is stable, Orlando says, and investors will likely remain skeptical about investing in multi-year projects in response to a sudden, perhaps temporary, spike in prices.

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