Energy infra damage from Middle East war could cost up to $58B: Rystad

War in the Middle East could trigger a massive $58 billion bill for repair and restoration of energy-linked infrastructure, according to a new analysis from Rystad Energy.

The cost for oil and gas facilities alone is estimated to potentially reach $50 billion.

“This is no longer just a story about damaged facilities in the Gulf. It is a stress test for the global energy supply chain,” Karan Satwani, senior analyst, supply chain research, said in the analysis. 

Repair costs increase dramatically

The estimated repair costs for Gulf energy infrastructure have substantially increased, now materially exceeding the initial $25 billion figure published three weeks ago, the Norway-based energy intelligence agency said.

Military strikes initially escalated the number of impacted assets across the region.

However, following the ceasefire between the US and Iran on April 8, these strikes largely subsided.

As a result of this damage, the estimated average for total repair and restoration spending across the region's oil and gas infrastructure has risen to $46 billion, Rystad said. 

The agency noted that the above figure represented the midpoint of a potential range between $34 billion and $58 billion and included an average of $5 billion allocated for industrial, power, and desalination assets.

Recovery timelines

The widespread damage has altered the recovery process.

Capital is not the main issue; equipment, contractors, and logistics are the primary constraints, according to the analysis. 

Recovery timelines vary by asset and country due to differences in execution capacity and supply chain access.

Repair work is likely to take priority over new project development, Rystad said.

Rystad Energy has assessed the damage across impacted energy-linked facilities and estimates total repair and restoration costs in the range of $34 billion to $58 billion.

“The lower end of the range assumes that, for facilities where the extent of damage is not yet fully clear, impacts are limited in scope, allowing for modular repairs supported by existing spare equipment and shorter procurement cycles,” the agency said. 

The higher cost projections are based on worst-case scenarios involving confirmed structural damage to key facilities. 

These scenarios necessitate the complete replacement of critical systems and factor in reliance on equipment with long lead times.

Furthermore, the estimates include conflict-related premiums for Engineering, Procurement, and Construction (EPC) execution, such as war-risk insurance and contractor mobilisation. 

Additional costs stem from delays associated with contractor deployment, logistical constraints, and, in certain instances, limited access to international supply chains.

“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,” Satwani added. 

Oil and gas sector repair costs are estimated at $30 billion to $50 billion, the analysis showed.

Non-hydrocarbon infrastructure (aluminium smelters, steel plants, power stations, and desalination facilities) will add $3 billion to $8 billion.

Iran and Qatar worst hit

Country-level cost distribution varies significantly, both in scale and asset type.

Iran has the most impacted facilities across the widest range of asset types, with potential repair costs up to $19 billion in a high-damage scenario, the agency’s estimates showed.

Restoration timelines in the Gulf are prolonged because the damage is widespread, and restricted access to Western EPC contractors, equipment, and technology limits execution options and extends procurement cycles, the agency said.

In Qatar, the impact presents a unique profile, characterised by significant concentration but also profound technical complexity. 

The core of the damage is located in Ras Laffan Industrial City, where several liquefied natural gas (LNG) trains have been compromised, and operations at the Pearl gas-to-liquids facility have been interrupted. 

This disruption now coincides with the ongoing North Field expansion program by QatarEnergy, where contractors—including a consortium recently awarded a project led by Technip Energies—are already actively engaged across multiple development phases, Rystad said.

Engineering & construction - largest share of costs

Rystad Energy estimates that facility repair and restoration costs for impacted oil and gas facilities could cost about $46 billion.

Engineering and construction represent the largest proportion of anticipated facility-level expenditure, with equipment and materials being the second largest, according to Rystad. 

This spending pattern aligns with the nature of the damage, which is predominantly concentrated in downstream and integrated assets.

Repair work in these areas is complex, necessitating the reconstruction of structural elements, the restoration of process units, and the intricate re-integration of systems, the agency added.

While engineering progresses quickly, the overall timeline is primarily dictated by the procurement and fabrication of critical equipment. 

Equipment delivery delays are the critical path, even as construction proceeds. Therefore, recovery is more dependent on securing constrained supply chains than on-site execution, according to Rystad.

The current situation is less about a structured reconstruction effort and more a rivalry for resources, specifically equipment, contractors, and logistical capability.

“Those that move early will secure capacity and shorten timelines, while others may face delays that extend well beyond the physical scope of damage,” Rystad Energy said.