Iran Conflict Brief: The High Cost of Attacking Energy Infrastructure

**Daniel Sternoff** (0:01)
Events in the Middle East are changing quickly, and the complexities of understanding the global energy landscape grow deeper by the hour. Join me as we talk to leading experts on the latest developments in the region and what it means for the rest of the world. Welcome to our rapid response series, the Iran Conflict Brief, a special edition of the Columbia Energy Exchange podcast. I'm Daniel Sternoff, a Senior Fellow at the Center on Global Energy Policy.
Good morning. We are recording this podcast on March 19th at 11 a.m. in Washington, DC., 7:30 p.m. in Tehran, and 6 and 7 p.m. respectively in Riyadh and Abu Dhabi. Today is day 20 of the conflict in Iran, and the war is moving into a much more dangerous phase for the world's energy system. Almost a fifth of world LNG and oil supplies have been bottled up for three weeks due to the closure of the Strait of Hormuz, and yesterday, March 18th, the war escalated sharply from logistical disruption to meaningful and potentially longer-lasting damage to some of the region's core energy infrastructure assets. Israel, with the apparent blessing of the Trump administration, targeted South Pars, the largest gas field on earth that is shared with Qatar and is Iran's largest domestic energy source. Iran swiftly retaliated across the Gulf, causing extensive damage to Qatar's Ras Laffan, the world's largest LNG plant, and also targeted oil fields and refineries in Kuwait, the UAE, and Saudi Arabia. This included a Saudi refinery on the Red Sea, signaling Iran can threaten Saudi Arabia's main outlet for crude oil to bypass the Strait of Hormuz. Brent crude spiked as high as $119 a barrel today, with some physical grades in Asia trading $12 to $20 higher than that as barrels become scarce. Early signs of demand destruction are appearing, and the crisis in natural gas, the topic of today's podcast, is looking even more acute. European TTF prices are 63 euros per megawatt hour, up more than 125% since the crisis began. The end game of the war is unclear. Iran's conventional military capabilities are being severely degraded, but there are few signs of regime collapse. Iran holds the advantage in the maritime arena, effectively blocking the strait, and President Trump faces a dilemma. Look for an exit ramp or escalate, possibly with boots on the ground, to show the United States is capable of securing freedom of navigation. As always, wars are harder to stop than to start. I'm joined today by Anne-Sophie Corbeau, a leading authority on the intersection of geopolitics and natural gas. Anne-Sophie currently serves as a global research scholar at the Center on Global Energy Policy. Her research is informed by two decades of senior roles at the International Energy Agency and BP, where she examined European energy security and the role of hydrogen. There is no one better than Anne-Sophie to help us untangle what's going on with LNG supplies, the recent attacks on energy infrastructure, and its impact on global markets. Good morning, Anne-Sophie, or shall I say good afternoon, since you're joining us from Paris.

**Anne-Sophie Corbeau** (3:28)
Thank you very much, Daniel. Good morning to you.

**Daniel Sternoff** (3:31)
So this is really the big one. We saw Iran strike energy infrastructure earlier in the conflict, including Ras Laffan industrial city, along with refineries, ports, gas fields and desalination facilities in Qatar, the UAE, Kuwait, Saudi Arabia, and Bahrain. The Israelis have also hit oil storage facilities in Iran during the last three weeks, and last weekend, the US military hit military but not energy targets on Iran's Kharg Island. So energy infrastructure has been impacted and has been pulled into this conflict, but the last 24 to 48 hours appear to be a real step change. Can you take us through exactly what happened in the last two days in South Pars and Qatar?

**Anne-Sophie Corbeau** (4:14)
Yeah, absolutely. So everything started yesterday. So on March 18th, when Israel launched an attack on South Pars. So that you understand, South Pars, this is the largest gas field in Iran. It's accounting for about 70% of their gas production. It's actually the same gas field as what we call the North Field in Qatar, because this is the same infrastructure. And in fact, this is the largest gas field in the world. So 70% of the Iranian gas production. But gas is very important for Iran's economy. This is about, actually, 70% of their primary energy consumption. And almost 90% of their electricity is coming from gas. So you can understand that if you are attacking South Pars, you are really attacking the Iranian energy system and its economy. So obviously, what immediately happened after that, later on March 18th, was a first attack on Ras Laffan.