New Delhi, Mar 20: The coming days are likely to be difficult for this country as import of natural gas are set to be hit badly following extensive damage caused to major energy facilities in Qatar from where India imports around 20% of this form of fuel.
Iran has carried out a series of attacks on Qatar’s energy installations over the last few days, the latest being the Rass Laffan Liquefied Natural Gas (LNG) facility hit on March 18 and yesterday morning.
The missile attacks have reduced the country’s LNG export capacity by 17% and caused an estimated loss of $20 billion in annual revenue, according to top officials of Qatar.
The attacks have damaged two LNG-producing Trains 4 and 6, totaling 12.8 million tons per annum (MTPA) of production, representing approximately 17% of Qatar’s exports, said Saad Sherida Al-Kaabi, the Minister of State for Energy Affairs of the major gas-producing Gulf nation.
Train 4 is a joint venture between QatarEnergy (66%) and ExxonMobil (34%), and Train 6 is a joint venture between QatarEnergy (70%) and ExxonMobil (30%).
He said the “extensive damage to our production facilities” will take up to five years to repair and “will compel us to declare long-term force majeure”.
Under the Contract Law, ‘force majeure’ exempts a party to a contract from liability or obligation in the event of an extraordinary development or circumstance beyond the control of that party, like a war, a riot, a strike, a crime or an epidemic.
This is bad news for India which imports roughly 20% of its natural gas requirements from Qatar.
India imports 50 percent of its natural gas requirements from the international market.
Of this, we buy approximately 40% of our LNG from Qatar, which means roughly 20% of India’s total LNG imports originate from Qatar.
The acute shortfall expected in natural gas supplies is likely to hit India, particularly the industrial and power sectors.
India’s daily natural gas consumption stands at 189 Million Metric Standard Cubic Meters per Day (MMSCMD), of which 97.5 MMSCMD is produced domestically.
As of last week, supplies amounting to 47.4 MMSCMD, representing a portion of India’s total natural gas imports, were disrupted due to force majeure conditions in Gulf countries and closure of the Strait of Hormuz, a major maritime route for global supplies of energy.
QatarEnergy expects the damage to its Ras Laffan Industrial City caused by missile strikes, which occurred on March 18 and early hours of yesterday, to take up to 5 years to repair, impacting supply to markets in Europe and Asia.
Providing an update on the damage to the facilities at Ras Laffan Industrial City, Sherida Al-Kaabi, who is also the President and CEO of QatarEnergy, said, “The damage sustained by the LNG facilities will take between three to five years to repair…. This means that we will be compelled to declare force majeure for up to five years on some long-term LNG contracts.”
The attacks also targeted the Pearl GTL (Gas-to-Liquids) facility, a production sharing agreement operated by Shell, that converts natural gas into high-quality cleaner burning drop-in fuels and produces base oils used to make premium engine oils and lubricants, and paraffins and waxes.
“The damage caused to one of the two trains at Pearl GTL is being assessed and is expected to be offline for a minimum of one year,” the minister said.
The Qatar government said as a result of this outage, there will be a loss of associated product production, which is as follows:
· Condensates: 18.6 million barrels which is around 24% of Qatar’s exports
· LPG: 1.281 MT which is around 13% of Qatar’s exports
· Naphtha: 0.594 MT which is around 6% of Qatar’s exports
· Sulfur: 0.18 MT which is around 6% of Qatar’s exports
· Helium: 309.54 MCFA which is around 14% of Qatar’s exports.
