Operations have ceased at QatarEnergy’s Ras Laffan LNG processing facility and the nearby Mesaieed power plant following an Iranian drone strike, according to Qatar’s Ministry of Defense. No casualties have been reported, and officials have yet to confirm what was damaged.
The shutdown affects Ras Laffan Industrial City, one of the world’s largest liquefied natural gas (LNG) hubs. Qatar ranks among the top global LNG exporters, making the disruption significant for international energy markets.
After QatarEnergy announced it had stopped LNG production, prices surged by 50%, reflecting immediate supply concerns and heightened geopolitical risk.
Shell plc declined to comment on whether its Pearl gas-to-liquids (GTL) plant was affected. Pearl produces approximately 1.1 million metric tons per year of API Group III base stock, using natural gas feedstock from QatarEnergy’s now-shuttered Ras Laffan facility.
A prolonged outage could tighten global Group III supply, given Pearl’s role as a major producer of high-performance base oils.
Trevor Gauntlett, a former Shell employee and lubricant industry consultant, said the company could mitigate short-term disruptions for GTL buyers from several from other locations.
“Shell does keep significant inventory of GTL at hubs in Houston, Texas, and Hamburg, Germany,” Gauntlett said.
He also emphasized Shell’s finished lubricant formulation flexibility could ease supply concerns in the longer term.
“Ten years ago, every single Group III formulation had an alternative approval with an alternative Group III,” Gauntlett said.
Shell could potentially source alternative feedstock from its Middle Distillate Synthesis plant in Bintulu, Malaysia. However, rerouted cargoes would need to navigate waters exposed to threats from Houthi rebels and Iranian military activity, increasing logistical complexity and insurance costs.
“I am sure Shell is under pressure from large customers, for example OEMs, to show their continuity plans and confirm product allocation,” Jan Trocki, an industry consultant, told Lube Report. “The key is the inventory in storage, how it’s allocated and when it might be replenished. Apart from feedstock, there’s no shipping likely to be online for however long.”
The suspension of LNG production by QatarEnergy has injected volatility into global energy markets. As one of the world’s largest LNG exporters, any extended disruption at Ras Laffan could tighten global LNG supply. Several other producers along the Gulf have also closed.