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The Iranian war could affect energy for everyone in the UK and beyond, with Wales taking centre stage.
Liquified Natural Gas (LNG) has long been seen as an alternative energy source to oil, and there has been huge investment in expansion of an import terminal in Milford Haven, with an enormous pipe running through Wales already.
But what many are unaware of is that LNG (like oil) could be affected by the fighting too.
QatarEnergy (QE), which produces a fifth of the world’s LNG, shut down its production and export facilities after some were hit by Iranian strikes.
Unable to extract, process and (with the Strait of Hormuz all but blocked), to ship its LNG, the firm has declared force majeure on its contracts.
The price of LNG has ballooned on world markets, and governments are scrambling to respond, making the large investment in the technology for it (not least in Wales) look questionable.
South Hook in Milford Haven, processes about 20 per cent of UK demand for natural gas, and it has been importing LNG before it is piped to people’s homes, since 2010.
Dr Carol Bell, an energy market expert and the candidate to represent Wales on the BBC board who was vetoed by the Welsh Government (WG), has said that Milford Haven is a “vital port” for the UK’s import mechanism of gas, and a “key conduit” to supply Europe, so any break in supply because of the war will be keenly felt.
Last year the Oxford Institute for Energy Studies (OIES), a think-tank, modelled a 12-month Hormuz blockade and found that even accounting for extra production spurred in other places by high prices, annual output would fall by 15 per cent.
This at a time when LNG demand was forecast to rise by nearly eight per cent in 2026.
As LNG needs to be cooled to 160°C below freezing to turn into a liquid, QE can economically stockpile no more than five days’ worth of production.
Also – tankers and liquefaction equipment are designed for high utilisation over long stretches of time, and after being switched off, they must be cooled back down, explains Anne-Sophie Corbeau of Columbia University (CU).
Different bits of kit must be restarted one after another rather than at the same time, and although QE has dozens of tankers, it has only a few jetties from which to load them.
So while the bombing of Iran might be a long way away, the ramifications of this war may be felt even in Wales.
The memories of our Editor, Welshman Phil Parry’s decades-long award-winning career in journalism (when major events like these were often reported on), as he was gripped by the rare disabling condition Hereditary Spastic Paraplegia (HSP), have been released in an important book – ‘A GOOD STORY’. Order it now!
Tomorrow – ‘Dark speak easy part three’, and as Phil has written many times a free and independent media is essential for a functioning democracy, although this does not exist in many states around the world, and a new book today highlights its importance.
