Qatar's Ras Laffan "energy city" was hit by Iranian strikes. PaPicasso/ShutterstockOn March 19, Ras Laffan, the largest liquified natural gas (LNG) terminal in the world, supplying one-fifth of the world’s super-chilled fuel, was hit by Iranian missiles and drones. The Qatari terminal suffered substantial damage in the strikes – fires were raging across the gas-to-liquids facility within the complex, which covers 295 square kilometres – the size of a large city.Investments worth tens if not hundreds of millions of dollars disappeared into thin air. Damage was estimated to be so extensive that QatarEnergy’s CEO, Saad Sherida al-Kaabi, said the company may have to declare a “force majeure” (non-fulfilment of orders due to circumstances outside their control) on long-term contracts. He said this could affect LNG supplies to Italy, Belgium, Korea and China “for up to five years”.Similar to oil, gas exports from the Persian Gulf supplied about 20% of world demand. But gas (mostly methane) is a very different fuel from crude oil. To move it in liquified form, methane must be chilled to below -162°C. But at these temperatures steel becomes brittle and shatters. So storing and transporting LNG in ships is expensive and very energy-intensive. Liquefaction and transportation of methane can easily consume 15% of the initial natural gas extracted. It also means that the infrastructure that enables a highly flammable and explosive fuel to be handled at these extreme conditions has to be complex and consequently very expensive. Ras Laffan, for example, was built over decades and in several phases, costing tens of billions of dollars.No quick fixInterestingly, Qatar’s North Field and Iran’s South Pars gas field are part of the same massive geological structure, separated only by a maritime border in the Persian Gulf. Together, they form the world’s largest natural gas field. So, Iran and Qatar are essentially exploiting the same gas reservoir the same way two people would use straws to drink from the same bottle. The US president, Donald Trump, now appears to have retreated from his threats to blow up “the entirety” of the Iranian gas field – but this geological fact had always made his comments quite ridiculous. While Qatar exports most of its production, Iran uses the bulk of its gas domestically (although some exports go via pipeline to Turkey and Iraq).But the damage to the complex has been done, and it affects some 17% of the country’s LNG infrastructure. Repairing it will take a long time, precisely because of the complexity of LNG projects. The plant must be warmed up slowly before repairs and cooled down slowly after. Rapid temperature changes can cause pipes to bend or even snap. And parts of the plant are bulky and hard to transport. The main heat exchangers can be more than 50 metres long, and compressors, turbines and liquefaction trains can easily weigh 5,000 metric tonnes. Storage tanks must be built of special alloys with double walls and customised insulation.In other words, gas is very different to oil. Recent events have shown just how vulnerable the LNG supplies from the Gulf region are. They are going to affect Asia most, as about three-quarters of Qatar’s LNG ends up there – particularly China, India, Taiwan, South Korea and Pakistan, as well as others. Most of the rest ends up in Europe – Italy, Belgium, Poland and a small amount to the UK (the UK imported only about 1% of its supply from Qatar last year). The majority of the UK’s imports come from its own UK production in the North Sea and imports from Norway and the US.However, LNG is a part of the global energy market and the shortfall in production will result in higher prices globally. Gas will end up with the highest bidder, while some nations will probably go back to using coal. This may especially be the case with India, Pakistan, Bangladesh and a few other Asian countries that are very sensitive to high fuel prices.Some European countries may even see coal as a cheaper option. Following the events in the Gulf, this “spark spread” (the profit margin from gas-fired electricity generation) has fallen, narrowing the gap in Europe with the “dark spread” (profit from generating power using coal).The benchmark for European gas prices, the Dutch Title Transfer Facility, has more than doubled since mid-January. Coal prices have picked up due to higher demand, but not as much. Unlike oil, the LNG shortage has turned from a logistical problem – the closure of the strait of Hormuz – into a structural one. The damage to the Qatari production facility may take several years to repair. This means that gas prices – already high – are likely to remain elevated for some time.Adi Imsirovic does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.