Scale energy crisiswhich was caused by the war on Middle Eastis still underestimated. The conflict escalates from a temporary blockade of the transport of raw materials to the destruction of key infrastructure – writes Michael Stoppard for “FT”.
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Europe must prepare for an energy shock
Politico, meanwhile, notes that Europe had no intention of tackling the energy supply crisis, but its resolve was shaken on Thursday when Qatar has warned it will have to cancel contracts with Italy and Belgium after Iran's massive attack.
On Thursday Japan and five NATO countries – Great Britain, France, Germany, Netherlands and Italy — said in a joint statement that they were ready to join “appropriate efforts” to ensure safe transit through the Strait of Hormuz. However, they did not specify how they intended to do this.
Michael Stoppard points out in the FT that initially many expected that any disruption in the Strait of Hormuz caused by the war would last a few days, maybe a few weeks, before oil and gas transport began to normalize. However, energy flows do not return to normal as quickly as turning on the tap.
Qatar had to turn off the tap after the attacks on Ras Laffan. It will take years to repair
Gas installation on Wednesday Ras Laffan in Qatarwhich provides about a fifth of global liquefied natural gas (LNG) supplies, was targeted by Iranian attacks that caused “extensive damage.” The strike followed an Israeli attack on Iran's South Pars gas field.
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Michał Czernek / PAP / photos
Saad al-Kaabi — Qatar's energy minister and president of QatarEnergy, which owns the Ras Laffan installation — warned on Thursday that It may take three to five years to repair the damage. “The conflict is escalating from a temporary blockage of trade flows to the destruction of key infrastructure.” – notes an analyst in “FT”.
He adds that analysts' estimates of the disruption horizon change from days to weeks and even months. A two-month reopening period is no longer the worst-case scenario, but the best.
Gas prices are rising rapidly in Europe
QatarEnergy's president also told Reuters on Thursday that the company would have to cancel long-term LNG supply contracts. The state-owned company reported that the damage may affect deliveries to Italy, Belgium, South Korea and China – writes Politico.
The damage will result in the removal of approximately 12.8 million tons of LNG from the market annually, which is approximately 17%. Qatar's total exports and approximately 3 percent global supply, for a period of three to five years, adds Politico.
Gas markets reacted sharply on Thursday, with a European futures contracts increased by up to 35%, reaching more than double pre-conflict levels, highlighting the risk of a long-term supply shock.
See also: Gas prices shot up after Iran's move. Experts warn of further consequences
LNG deliveries to Poland from Qatar
On Thursday, EU leaders met for high-level talks in Brussels, and one of the most important topics was energy.
Politico notes that Germany is not dependent on Qatari LNG. Other EU countries, including Poland, Italy and Belgium, rely more heavily on Middle Eastern countries for their LNG.
Poland announced on Thursday that its gas supplies are “secured”, adding that Qatari LNG accounts for only 10 percent. the country's total gas supply. “This volume can be gradually supplemented with supplies from other sources, if necessary,” said Grzegorz Łaguna, spokesman for the Ministry of Energy of the Republic of Poland, quoted by Politico.
Source: Financial Times, Politico
