“Armageddon” was the reaction of one expert after Iran’s double strike on Qatar’s vast liquefied natural gas terminal.
The vast facility – three times the size of Paris – is 3,000 miles from the UK but the fall-out from the attacks risks turbo-charging the impact of the Middle East war on almost every household here.
Just 1% of the UK’s gas supplies came from Qatar last year, suggesting on the face of it we have little to fear. But while there’s no danger of any UK gas shortages for now, we still risk being hit hard by a global surge in wholesale prices.
After decades of drawing on North Sea gas, the UK now has the import the majority of its needs, a figure set to rise dramatically in the decades to come.
Just one undersea pipeline, Langeled, which connects Norway with the Easington terminal near Hull, is responsible for over 50% of the UK’s gas imports. Existing contracts means supplies via this route should be protected.
But gas is a globally traded commodity, with those willing and able to pay the most at the front of the queue. That risks a bun fight between countries around the world to bag the vital supplies they need. It raises the prospect of the UK having to slog it out with the likes of China, the world’s second biggest economy, if things get tight.
And while pipelines with Norway and Europe give the UK some certainty, supertankers packed with LNG can be rerouted at will to whoever has the deepest pockets.
Other big LNG producers include Angola, Trinidad and Algeria. But the UK’s number one source of LNG is the US, and gas produced by the controversial fracking process.
Soaring gas prices are set to deliver a windfall for American’s energy giants, and hence Donald Trump’s confers. This reliance on the US exposes another front on strained relations between Trump and the UK government.
The scale of the impact of soaring wholesale gas prices is hard to nail down just yet, but some experts have estimated it could hike energy bills by £300 to £500 a year.
Any increase of that scale from the summer onwards would make it almost inevitable that the government would step in with some form of emergency bill support, only adding to the nation’s colossal national debt.
Yet even if the Middle East conflict were resolved soon – something that appears increasingly unlikely – the shockwaves could be felt for many months, or even years, to come.
Anne-Sophie Corbeau, a former head of gas analysis at BP, called the attack on Qatar’s Ras Laffan complex an “Armageddon scenario”.
In normal times, a fifth of the world’s LNG flows through the site, yet its owners have warned the scale of the damage means it could take three to five years to repair.
With every day that goes by, and the prospect of any resolution to the conflict fades, so too does the risk that the world is on the precipice of another economic calamity.
As ever at such times, there will be winners: alarmingly, they include Russia’s President Putin and funding for his brutal war on Ukraine. The losers are the countless number of households hit with soaring bills or plunged into poverty.
