The unfolding Middle East crisis extended to Iran’s energy infrastructure as Israel launched an attack on a giant gas field in the Persian Gulf, threatening further turmoil for markets.
Israel’s strike on Saturday triggered a powerful explosion and fire at a natural gas processing facility linked to Iran’s giant South Pars field. The hit on the onshore Phase 14 processing plant forced the shut down of a production platform at the field, according to a report from the semi-official Tasnim news agency.
The targeting of energy assets represents a new front in the conflict, which erupted on Friday when Israel launched a wave of attacks directed at the Islamic Republic’s nuclear program. While the damage to the gas facility may be confined to Iran’s domestic energy system, the escalation may nonetheless provoke further swings in oil futures when trading resumes after the weekend.
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The attack heightens the risk to oil infrastructure in Iran, OPEC’s third-biggest producer, and to shipments from elsewhere in the region. US crude prices surged as much as 14% on Friday, before settling near $73 a barrel.
“It’s going to be pretty significant,” Richard Bronze, head of geopolitics at consultant Energy Aspects Ltd., said of Saturday’s attacks. “We appear to be in an escalatory cycle,” and there will be “questions about whether Israel is going to target more Iranian energy infrastructure,” he added.
South Pars, the world’s largest gas field, is shared between Iran and neighboring Qatar, where it’s known as the North Field. Iran’s gas is mainly for domestic use and is not widely exported, with South Pars providing roughly two-thirds of the country’s supplies.
The fire at the facility at Phase 14 halted production from one of its offshore platforms, amounting to 12 million cubic meters per day, Tasnim reported. Firefighters prevented the blaze from spreading to other units, it said.
A separate fire also broke out at the Fajr Jam gas plant, which processes fuel from South Pars as well as the Nar and Kangan fields and is one of Iran’s largest processing facilities, Tasnim reported.
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The strikes could further cripple Iran’s wobbling energy industry. The country has been facing some of the worst power outages in decades that have hit large swathes of the economy, pushing a country rich in energy resources further into crisis. Blackouts cost the economy about $250 million a day, according to estimates from the Iran Chamber of Commerce, Industries, Mines and Agriculture.
“Israel is looking for economic targets, but at least in this stage trying to limit the impact and the knock-on effects for international markets” to avoid alienating allies, Bronze said.
An official cause wasn’t given for the blaze at Fajr Jam, but initial assessments pointed to hostile drones, Tasnim reported.
Iran has developed a vast network of gas-processing and chemical plants onshore around the port of Assaluyeh on the country’s southern coast. The facilities linked to the offshore production sites are also vital for export of condensate, a light oil-like liquid usually produced with gas. Iran mainly ships condensate to China.
Iran exports some gas to Iraq and has also shipped to Turkey in the past, but the country has never been able to secure the investment needed to complete liquefied natural gas terminals that would allow it to widely export the fuel.
“This is a significant escalation,” said Jorge Leon, an analyst at Rystad Energy A/S who previously worked at the OPEC secretariat, said of the onslaught on Saturday.
“This is probably the most important attack on oil and gas infrastructure since Abqaiq,” Leon said, referring to the 2019 strike that briefly crippled one of Saudi Arabia’s key oil-processing plants.
This article was generated from an automated news agency feed without modifications to text.
