Shell Partially Restarts Qatar Pearl GTL Plant as Naphtha Cargoes Return

Shell has restarted part of its Pearl gas-to-liquids plant in Qatar, a move that allows the company to build a limited amount of product inventory in storage. Its ability to ship those products still depends on the regional security situation, Shell said.

Traders said QatarEnergy has returned Pearl-GTL naphtha cargoes to the spot market, six months after the facility was damaged in the Iran war. The state refiner has begun offering cargoes that include the Pearl-GTL grade and has resumed some contractual deliveries, bringing supply from the complex back to a market where availability is tight.

Naphtha tender

QatarEnergy issued a spot tender for as much as 50,000 metric tons of naphtha across four grades, including Pearl GTL, on a free-on-board basis from Ras Laffan port inside the Strait of Hormuz, according to traders active in the market. Its earlier tender, which also carried the Pearl GTL grade, was awarded at a $150 discount to Middle East quotes on an FOB basis.

Contractual volumes are moving again to some buyers. Haldia Petrochemicals, one of India's two naphtha importers, received its 50,000 metric tons for the quarter.

The war disrupted refinery operations and temporarily closed the Strait of Hormuz, the route through which about 20% of global oil and LNG supplies had been passing.

Train 2 repair timeline

Pearl, wholly owned by Shell, runs on gas from Qatar's North field. It was struck in March, damaging one of its two processing trains. At full capacity the site can produce 140,000 barrels of oil equivalent per day, and its output feeds Shell's downstream supply chain, including its lubricants business.

Repairs to Train 2 are expected to finish in the first quarter of next year. Shell estimated in March that a full repair of Pearl would take a year. The company said safe and reliable operations at the site depend on regional security, including the safe passage of shipments through Hormuz.

On the LNG side, the first train of QatarEnergy's North Field East expansion will be ready to start operating in November, according to two people familiar with the plans, giving Qatar a route to recover some of its lost output.

Exposure through Hormuz

A report from the Center for Strategic and International Studies in August placed Qatar among the countries most exposed to a prolonged disruption in the strait. Qatar's LNG expansion program was designed to nearly double an existing export capacity of roughly 77 million metric tons per annum, a plan meant to strengthen its position as the world's second-largest LNG supplier and, by pushing the market into oversupply, to help pull global LNG prices down by 2027. LNG consumers had been counting on that.

The conflict has raised a wider question: has the expected glut simply been delayed, or has the future supply outlook changed for good?

Restoring the undamaged export capacity of 64 mtpa as quickly and completely as possible is Qatar's first priority. Two liquefaction trains co-owned by QatarEnergy and ExxonMobil were attacked by Iran on March 18 at the Ras Laffan LNG complex, and QatarEnergy has indicated repairs could take three to five years, a 17% loss of total export capacity.

A second commercial priority is speeding up construction of the North Field East liquefaction plants, which were well advanced before the conflict and could come online in 2028. Recovering full capacity and adding new volumes will require clearer visibility on transit through Hormuz. As CSIS put it, a producer the size of Qatar cannot run every liquefaction train unless it is confident that multiple cargoes can pass through the strait each day.