Indians Rush to Buy Induction Cookers, South Korean Chips Face Bottlenecks, How Big is the Impact of Qatar's LNG Supply Cuts?

The Middle East conflict escalation further impacts global energy security.

QatarEnergy estimates that the damage caused by Iranian missile attacks on Ras Laffan Industrial City over the past two days may take up to five years to repair.

The company announced a force majeure for long-term liquefied natural gas (LNG) contracts supplying Italy, Belgium, South Korea, and China, which legally exempts them from obligations.

Qatar has proven natural gas reserves of approximately 25.5 trillion cubic meters, second only to Russia and Iran. The Strait of Hormuz handles about 20% of global LNG shipping trade and is the only maritime route for Qatar’s LNG exports.

The company accounts for about 20% of global LNG supply, with main exports going to Asia (about 80%) and Europe (about 20%).

In retaliation for attacks on domestic energy infrastructure by the U.S. and Israel, the Islamic Revolutionary Guard Corps launched a fierce operation early on March 19, targeting five oil and gas facilities in Saudi Arabia, the UAE, and Qatar.

Among them, Qatar’s Ras Laffan Industrial City was hit by five ballistic missiles. This industrial city hosts the world’s largest LNG production facilities. U.S. energy giant ExxonMobil is directly involved in the liquefaction and export operations at Ras Laffan.

Iran’s attack damaged two LNG production units (Units 4 and 6), with a combined annual capacity of 12.8 million tons, accounting for about 17% of Qatar’s total exports.

LNG’s carbon emissions are much lower than other traditional energy sources and are widely used in residential and industrial sectors.

Due to its stability in supply, deep industrial dependence, and the gradual pace of the global energy transition, fossil fuels like natural gas remain the “ballast” supporting modern civilization. Any disruption or sharp price fluctuations could pose severe challenges to the entire societal system.

Populous Europe and Asia are especially sensitive. Since the outbreak of the Russia-Ukraine conflict in February 2022, Europe has significantly reduced pipeline gas imports from Russia, turning to LNG as the main alternative.

On March 2, when Qatar’s LNG production was interrupted early in the war, European natural gas prices surged by 50%. After the March 19 opening of March futures, European gas prices rose over 30%, exceeding 70 euros per megawatt-hour, more than doubling pre-conflict levels.

Analysts say buyers in Asia and Europe are competing for limited spot LNG, with U.S. LNG ships originally headed to Europe rerouting to Asia, where higher premiums are paid.

The impact of LNG supply disruptions is far-reaching, affecting everything from Indian dining tables to South Korean chip manufacturers.

Public data shows that about half of India’s LNG depends on imports, mostly transported via the Strait of Hormuz.

According to China Energy News, the Indian government has ordered priority for household gas supplies while reducing industrial sales. Citizens and businesses are turning to electric stoves as alternatives. Amazon India’s sales of induction cookers have increased over 30 times, and rice cookers and electric pressure cookers have quadrupled.

Additionally, helium produced as a byproduct in LNG processing, after high-purity refinement, is used for cooling lithography machines, wafer etching and cleaning, and precise temperature control in high-end manufacturing.

This critical raw material for Asia’s chip industry is likely to face supply shocks, further threatening about half of the global semiconductor capacity.

Liquid helium has a shelf life of only about 45 days; if supply is cut off for more than four weeks, the global supply chain could undergo systemic restructuring. 64.7% of helium in South Korea comes from Qatar. Samsung Electronics and SK Hynix have urgently checked their inventories.

Due to the energy supply crisis, the South Korean government is also considering vehicle restrictions to reduce energy consumption.

However, rising prices of traditional energy sources may accelerate the energy transition. For example, a BYD car dealership in Manila’s financial district received a month’s worth of orders in the past two weeks. A VinFast showroom in Hanoi saw customer visits triple.