RIYADH: UAE’s ADNOC Gas has made temporary adjustments to its liquefied natural gas and export-traded liquids production due to shipping disruptions in the Strait of Hormuz, as the ongoing conflict in the region continues to escalate.
In a bourse filing on the Abu Dhabi Securities Exchange, the energy giant said that it is actively collaborating with customers and partners on a transaction-by-transaction basis to fulfill commitments wherever possible.
The company also confirmed that debris has fallen in some of its facilities, adding that its core processing integrity has not been compromised.
The effective closure of the Strait of Hormuz, a narrow channel along the Iranian coast, has stopped the passage of 20 percent of the world’s oil and liquefied natural gas since the US and Israel began airstrikes on Iran on Feb. 28.
Iran also warned that it will target energy and water facilities in Gulf countries, as US President Donald Trump vowed to attack Iran’s electricity infrastructure within 48 hours if the Strait of Hormuz is not opened for vessels.
“Operations are continuing safely across ADNOC Gas asset base. We remain committed to delivering shareholder value,” said ADNOC Gas in the bourse filing.
It added: “The company’s continued focus is on ensuring the safety of staff, contractors, partners, and operations while continuing to serve its customers.”
ADNOC Gas, however, did not provide further details on the temporary adjustments it made to its LNG output.
The company’s Das Island facility, located in the Gulf, has an LNG capacity of 6 million tonnes per year and relies on tankers passing through the Strait of Hormuz to transport its products, Reuters reported.
Iran and Israel’s ongoing strikes have severely damaged Middle East energy infrastructure, including gas fields, oil refineries, and terminals, with repairs expected to take years.
The UAE’s Habshan gas processing complex, a major facility with a capacity of 6.1 billion cubic feet per day, was shut down on March 19 due to debris from intercepted missiles, following attacks on the area. Operations in this facility are suspended pending safety assessments.
These developments, which the International Energy Agency has described as the worst global energy disruption in history, surpassing the 1973 Arab oil embargo that caused fuel shortages and economic damage, are compelling energy producers to reassess their production strategies.
Tackling challenges
Commenting on the latest development, Adnan Merhaba, partner and energy practice lead at Arthur D. Little Middle East, said that national oil companies in the Middle East region have a proven track record of overcoming challenges posed by geopolitical tensions.
“Middle East NOCs have robust risk and crisis management embedded within their respective organizations and operations. Various disruptive scenarios have been simulated for years, if not decades and hence they are able to react in an agile manner,” said Merhaba.
He added: For example, Saudi Arabia several decades ago built out a pipeline connecting the Eastern oil production facilities to the west coast to be able to ship through the Red Sea thereby bypassing the Strait of Hormuz, which is a perfect hedging strategy for the disruption in the Strait.”
The nameplate capacity of the East-West Pipeline is 7 million barrels per day, equivalent to around 70 percent of the Kingdom’s OPEC-+ quota.
Vijay Valecha, chief investment officer at Century Financials, echoed a slightly different view and said that regional producers are largely focused on keeping supply moving, while global energy companies are taking a step back, cutting exposure and reassessing the risks on the ground.
“Although oil prices holding above $100 per barrel are helping to absorb some of the impact, the broader picture suggests a more fragile and risk-aware backdrop for global energy markets,” said Valecha.
Attack on energy sites
Earlier this month, QatarEnergy declared force majeure on LNG supplies after suspending production at key export facilities.
On March 18, Iran attacked Qatar’s LNG hub Ras Laffan, damaging 17 percent of its production capacity, which could take three to five years to repair.
A day later, French energy giant TotalEnergies said that it lost 15 percent of its oil and gas global output as the ongoing conflicts between the US-Israel alliance and Iran shut fields across the UAE, Qatar and Iraq.
TotalEnergies has significant operations in the Middle East region, including the Satorp Refinery in Saudi Arabia, the Al Shaheen offshore oilfield in Qatar, and the Halfaya oil field in Iraq.
The French firm, however, added that the impact of LNG production shutdowns in Qatar on its trading activities is limited, as most Qatari LNG is marketed by QatarEnergy.
BAPCO Energies, Bahrain’s main energy company, also declared force majeure on operations after an attack on the plant, which could disrupt its 400,000 barrels a day production capacity.
