In a market update sent to Rigzone on Wednesday, Rystad Energy noted that its analysis shows that repair and restoration costs for energy-linked infrastructure, as a result of war in the Middle East, could hit $58 billion.
The total for oil and gas facilities could potentially be up to $50 billion, according to the analysis, Rystad’s update outlined. The update, which pointed out that three weeks ago Rystad published an initial estimate of $25 billion in repair costs across Gulf energy infrastructure, said “the scope of damage has expanded materially”.
“The continuation of military strikes drove up the number of impacted assets across the region before largely subsiding following an 8 April ceasefire between the U.S. and Iran,” Rystad noted in the update.
“This pushed the estimate for the average in potential total repair and restoration spending to $46 billion – representing the midway point in the range of $34 billion to $58 billion – across oil and gas infrastructure, inclusive of an average of $5 billion across industrial, power and desalination assets,” it added.
“The ceasefire, combined with stalled negotiations and renewed escalation risk, continues to shape the operating environment, alongside risks of disruption and potential blockades affecting shipping through the Strait of Hormuz,” it continued.
In the update, Rystad outlined that Iran and Qatar have borne the brunt of the energy facility damage from the war.
“Iran accounts for the highest number of impacted facilities and the widest spread across asset types, with repair costs potentially reaching up to $19 billion under a high-damage scenario,” Rystad said.
“Major disruptions are concentrated in the South Pars onshore gas processing facilities at Asaluyeh, along with the adjacent Pars Special Economic Energy Zone and Mahshahr petrochemical complex, removing significant gas processing and downstream petrochemical capacity,” it added.
“Additional impacts across key refineries, fuel storage depots in the Tehran region and export infrastructure at Lavan and Siri Island have further constrained domestic fuel distribution and reduced export flexibility, increasing reliance on fewer operational outlets,” it continued.
“The impact in Iran therefore extends across the value chain, with simultaneous disruption to processing, refining, storage, and exports,” Rystad went on to state.
Rystad highlighted in the update that restoration timelines are structurally longer than elsewhere in the Gulf, “not only due to the scale and dispersion of damage, but also because access to Western EPC contractors, original equipment manufacturers and process technologies remains restricted, narrowing execution options and extending procurement cycles”.
Qatar presents a different profile, according to the update, which outlined that the impact in this country is “more concentrated but significantly deeper in terms of technical complexity”.
“Damage is centered on Ras Laffan Industrial City, where multiple liquefied natural gas (LNG) trains have been affected alongside disruption at the Pearl gas-to-liquids facility,” Rystad pointed out in the update.
“This is now intersecting with QatarEnergy’s ongoing North Field expansion program, including the latest award to a consortium led by Technip Energies, with contractors already active across multiple phases,” it added.
“With these projects already under execution or in early construction, there is a clear overlap between expansion work and repair activity within the same industrial cluster,” it said.
“Both draw on similar pools of engineering teams, fabrication yards and site crews, even if not always the same contractors. If some of this capacity is redirected towards repair activity, it could lead to delays of a few months in ongoing expansion projects, especially where timelines are already tight,” it continued.
“The impact is more likely to show up as slower progress on execution rather than any formal change in project schedules,” Rystad went on to state.
Rigzone has contacted the Iranian and Qatari foreign ministries for comment on the Rystad update. At the time of writing, neither have responded to Rigzone.
Also in the update, Rystad noted that recovery timelines are beginning to diverge across assets and countries, reflecting differences in domestic execution capacity and supply chain access. The company said capital availability is not the primary constraint and revealed that, instead, access to equipment, contractors, and logistics “is emerging as the key limiting factor”.
Rystad went on to warn that repair activity is likely to displace new project execution, as operators prioritize restoring existing production over advancing greenfield developments.
Rystad, which highlighted its estimate that facility repair and restoration costs for impacted oil and gas facilities could cost about $46 billion, noted that, at the facility level, engineering and construction accounts for the largest share of total expected outlay, followed by equipment and materials.
“This is consistent with the dominance of downstream and integrated assets in the damage profile, where repair activity involves rebuilding structural components, reinstating process units and re-integrating complex systems,” Rystad said.
The company warned that the sequencing of spending is equally important.
“Engineering and assessment activity progresses relatively quickly, but the overall timeline is largely governed by procurement and fabrication of critical equipment,” Rystad said.
“While construction and installation can proceed in parallel once materials are available, delays in equipment delivery continue to define the critical path across most major assets,” it added.
“As a result, recovery timelines are less dependent on on-site execution and more on how quickly operators can secure access to constrained supply chains,” it continued.
“What is emerging is less a reconstruction program and more a competition for access – access to equipment, contractors, and logistics capacity,” Rystad warned.
The company said those that move early will secure capacity and shorten timelines, while others may face delays that extend well beyond the physical scope of damage.
“The pace of recovery will therefore be defined less by the scale of impact and more by access to constrained supply chains,” Rystad projected.
In the update, Karan Satwani, Rystad Energy Senior Analyst, Supply Chain Research, warned, “this is no longer just a story about damaged facilities in the Gulf; it is a stress test for the global energy supply chain”.
“The same equipment and contractors needed to rebuild are already committed to a wave of LNG and offshore projects sanctioned since 2023,” Satwani added.
“Repair work does not create new capacity, it redirects existing capacity, and that redirection will be felt in project delays and into inflation far beyond the Middle East,” the analyst said.
“The $58 billion bill is the headline, but the knock-on effects on energy investment timelines globally may prove just as significant,” Satwani warned.
In a release sent to Rigzone on March 25, Rystad said war in the Middle East had triggered severe global supply disruptions in oil and gas, “with reported damage and shutdowns affecting liquefied natural gas (LNG) trains, refineries, fuel terminals and critical gas-to-liquids facilities across the region”.
The company warned in that release that, according to its estimates, energy infrastructure repair and restoration costs to date, as of March 25, “could reach at least $25 billion, based on an initial assessment of impacted facilities”. Rystad highlighted in that release that these costs were expected to rise further.
“Spending is likely to be driven primarily by engineering and construction, followed by equipment and materials,” Rystad noted at the time.
Audun Martinsen, Head of Supply Chain Research at Rystad Energy, stated in that release that “the Gulf region’s recovery will be defined less by financial capital and more by structural constraints”.
“While some assets may be restored within months, others could remain offline for years. Beyond the status of the Strait of Hormuz, every day of damaged or shut-in infrastructure pushes pre-war production capacity further out of reach,” Martinsen added.
“Iran’s South Pars offshore field and Qatar’s Ras Laffan facility stand out as particularly concerning cases,” the Rystad Head continued.
“The scale of damage and long lead times for critical equipment could result in slow recovery at Ras Laffan, while Iran’s legal exclusion from Western supply chains means it will have to rely on Chinese and domestic contractors, which is a technically feasible approach that could be slower and more expensive,” Martinsen went on to state.
“Urgent repairs will have to take precedence in place of planned expansion,” Martinsen said.
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