By DAVID McHUGH, AP Business Writer
FRANKFURT, Germany (AP) — For the second time, Israel has attacked Iran’s South Pars natural gas and its associated petrochemical complex – an energy lifeline for Iran that both helps keep the lights on for civilians and provides a key source of export earnings.
Israel’s Defense Minister Israel Katz said Monday that Israel attacked a key petrochemical plant at Asaluyeh, the onshore industrial aspect of the gas field, which lies under the Persian Gulf.
Katz said the “powerful strike” hit what he called “the largest petrochemical facility in Iran … responsible for about 50% of the country’s petrochemical production.”
Attacks on South Pars are sufficiently provocative to Iran that Israel’s earlier attack on March 18 prompted Iran to target energy infrastructure in other Middle East countries in response, an escalation of the war that sent new shockwaves across the region and beyond.
After the March attack, President Donald Trump said that Israel would not attack South Pars again, but warned on social media that if Iran continued attacking key energy infrastructure in Qatar, the United States would retaliate and “massively blow up the entirety” of the field.
Here are things to know about the South Pars natural gas field and its associated industries making chemicals using gas as a raw material:
Iran’s share of the world’s largest gas field provides both domestic energy and export earnings.
South Pars is Iran’s biggest source of domestic energy in a country that sometimes struggles to produce enough electricity. The gas field under the Persian Gulf — the world’s largest — is shared by Iran and Qatar. It’s called South Pars on the Iranian side and the North Field on the Qatari side.
Iran relies heavily on gas to produce electricity and heat homes. It is the fourth-largest consumer of natural gas in the world, behind the U.S., China and Russia, according to the Center on Global Energy Policy at Columbia University, even though its economy is much smaller. In contrast to other Middle East countries, it uses gas for heating due to its cold climate and much of that use is subsidized, which discourages efficient use.
Abundant, affordable gas from South Pars fuels industries making chemicals for export
While the South Pars gas is important at home, the petrochemical plant is a source of export earnings. The gas is used to make basic chemical building blocks like ethylene, propylene, methanol, ammonia and urea used to make other products such as plastic pipe, packaging, clothing, household products or fertilizer. Among the largest importers are Turkey, China, India and Southeast Asian countries, according to Iranian mining and petrochemical export company Irminex. Iran’s petrochemical industry gets a competitive advantage from low raw material costs due to its access to South Pars gas.
Israeli Prime Minister Benjamin Netanyahu says those earnings benefitted Iran’s paramilitary Islamic Revolutionary Guards Corps. “Today we destroyed the largest petrochemical plant in Iran,” Netanyahu said. “In other words, we are systematically destroying the money machine of the Revolutionary Guards.”
Iran has struggled with rickety energy infrastructure and shortages
Iran has suffered power shortages because of interruptions to gas supplies, even though on paper it has huge energy reserves. In July, public buildings had to shut down when a heat wave strained the power grid.
So an attack on South Pars could potentially target both civilian welfare and export earnings.
Qatar and Iran have made starkly different uses of the same underground reserves
Qatar, with only 3 million people, has invested billions in developing the field as a source of liquefied natural gas, which before the war it exported from its Ras Laffan facility. It’s a lucrative business and made Qatar the supplier of about a fifth of the world’s LNG before the war forced it to shut down Ras Laffan.
Iran, with 93 million people, is another story. Sanctions and lack of investment have blocked the development of LNG export terminals. Instead, Iran feeds its gas into its own pipeline system and uses it domestically for cooking, heating homes, generating electricity, and as a raw material for industry. Iran exports relatively little, about 9 billion cubic meters, compared to Qatar’s more than 120 billion cubic meters.
So the South Pars petrochemical industries are one way Iran can get export earnings from its massive gas reserves.
Iran tried to develop LNG for export, but was blocked by sanctions
Iran once planned three LNG export projects on its Persian Gulf coastline, one with Total Energies and another with Shell. But sanctions over its nuclear program have blocked the projects by barring the import of the needed technology and investment. A third site at Asulayeh is reportedly near completion after starting construction almost 20 years ago.
