A major natural gas processing facility in Abu Dhabi has been temporarily shut down following a fire, marking the second closure since the outbreak of hostilities in the region in late February. The Abu Dhabi media office confirmed that the fire at the Habshan facility was caused by falling debris from an intercepted missile. The Habshan facility is the largest natural gas processing plant in Abu Dhabi and one of the most critical energy infrastructures in the UAE, responsible for processing and transporting natural gas. Additionally, Habshan houses oil facilities and serves as the starting point for a crude oil pipeline operated by the Abu Dhabi National Oil Company to Fujairah, a key port located outside the Strait of Hormuz.
In a contrasting development, Israel's largest natural gas field has resumed production after a 33-day shutdown due to the conflict, potentially offering some relief to a market strained by supply tightness. A spokesperson for NewMed Energy, a partner in the project, stated that the Leviathan field has now restored supplies to both the domestic market and for export. The Israeli Energy Ministry had indicated the previous day that the field was set to resume operations. The Leviathan field, a major gas field in the Eastern Mediterranean operated by Chevron (CVX.US), is vital for meeting Israel's domestic demand and is also a significant source of natural gas for Egypt. Since the conflict began on February 28, Israel had ordered the temporary closure of some gas fields for security reasons, further exacerbating global supply tensions as the war has already disrupted shipping through the Strait of Hormuz, while missile attacks have damaged Qatar's largest global liquefied natural gas plant. Another Israeli gas field, named Karish, which was also ordered closed by the government after the outbreak of war, has not yet resumed production. As of the latest update, the European natural gas futures price was reported at 50.08 euros per megawatt-hour.
Attacks on Middle Eastern energy infrastructure are occurring with increasing frequency as the conflict intensifies, with targets expanding from military bases to energy assets. Just hours before the fire at the Habshan facility, Kuwait's Mina Al-Ahmadi refinery was attacked, causing a fire in operational equipment. Authorities also reported that a power and desalination plant was struck early Friday, resulting in damage to some equipment. In March, a fire broke out at the UAE's large Shah gas field following a drone attack, suspending related operations. The Shah field, one of the UAE's largest gas fields, is jointly operated by the Abu Dhabi National Oil Company and Occidental Petroleum of the United States. Qatar's liquefied natural gas facilities in Ras Laffan Industrial City were also severely impacted last month, with two of its 14 production trains seriously damaged, leading to a loss of approximately 17% of its LNG export capacity, equivalent to an annual reduction of 12.8 million tonnes.
The International Energy Agency (IEA) warned last month that the damage to the global energy supply chain from the Middle East conflict is unprecedented in scale and will require a lengthy recovery period. The IEA stated that the conflict has resulted in "serious or extremely serious" damage to over 40 energy facilities across nine countries, and that restoring production at oil fields, refineries, and pipelines will take considerable time. The impact is equivalent to the combined effect of the two major oil crises of the 1970s and the natural gas crisis triggered by the 2022 Russia-Ukraine conflict "stacked together." For a global energy market already facing supply shortages, the only short-term solution lies in the resumption of navigation through the Strait of Hormuz. Although the Middle East conflict continues, there are reports that the Strait of Hormuz may partially reopen. It is reported that Iran and Oman are drafting an agreement aimed at implementing "passage regulation" for vessel traffic through the Strait of Hormuz, while emphasizing that it will not restrict vessel transit. The market views the progress involving Oman as offering new hope that the Strait might be partially reopened without relying on military means. In the long term, the scale of damage to Middle Eastern energy infrastructure means that even if the conflict ends, normalizing the global energy supply chain will be a protracted process.
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