After Ceasefire, Iranian Attacks Cut Saudi Oil Production
Official Saudi sources have confirmed that recent Iranian attacks caused extensive damage to oil and gas facilities, killing at least one person and leading to a substantial cut in production capacity. Argus Media reports that all of the strikes occurred within the past 48 hours.
The official Saudi Press Agency detailed out the effects of the drone strikes in an extensive list released Thursday. The most serious issue is yesterday's attack on a pumping station for the East-West Pipeline, which has become a lifeline for moving Saudi crude from the bottled-up Gulf to a secure loading terminal on the Red Sea. It is the largest pipeline carrying GCC crude oil to market, and the strike reduced its throughput by about 700,000 barrels per day, according to SPA.
Saudi upstream operations have also suffered. An oil production facility at the Manifa offshore field was hit, cutting output by 300,000 barrels per day, and the Khurais facility as well, cutting another 300,000 bpd (a total production cut of 600,000 bpd).
In addition, other Iranian strikes hit the giant refinery and petchem complexes operated by Saudi Aramco and foreign partners. The list includes refining sites in Jubail, Ras Tanura, Yanbu and Riyadh - all affecting exports of refined products (though officials did not provide an exact amount).
In nearby Qatar, one of the world's leading producers of LNG, contractors are beginning intensive work to prepare for the restart of the working liquefaction trains at Ras Laffan. These facilities process the output from Qatar's gigantic North Dome complex and ship it to the world, accounting for about 20 percent of the total global supply of gas traded over the water. Iran's ballistic missiles hit two out of the 14 trains at Ras Laffan, taking them out of commission for up to five years, according to operator QatarEnergy.
WoodMac assesses that the north half of Ras Laffan could be brought back online within a month. The south side of the site was damaged in an Iranian strike and could take until August to return its surviving four trains to operation, the consultancy said in a research note. It is unclear if QatarEnergy will want to begin restarting production before a permanent truce is agreed between the U.S., Iran and Israel, Wood Mac noted.
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For the region's shut-in oilfields, now totaling some 11 million barrels per day of lost production, the restart timeline could be even longer. Wood Mac predicts a 6-9 month timeline for bringing wells and upstream infrastructure back online, accounting for unforeseen repairs and setbacks during the reactivation process.
"All this comes with a health warning," said Fraser McKay, Head of Upstream Analysis at Wood Mackenzie. "Operators hastened by regulators and governments to restore production too rapidly, will risk doing more long-term damage to foundational assets."
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