Energy Infrastructure Repairs in Middle East Could Cost $58 Billion, Says Rystad

The primary constraint for repairs is not capital but the availability of specialized equipment and contractors, a situation described as a "stress test for the global energy supply chain."

Energy consultancy Rystad Energy has significantly revised its estimate for the cost of repairing damaged energy-linked infrastructure in the Middle East. The firm now states the total could reach $58 billion, more than double a previous estimate of $25 billion published just three weeks ago.

Revised Cost Estimate

In an analysis published Wednesday, Rystad Energy detailed that approximately $50 billion of the total $58 billion is attributed specifically to oil and gas-related infrastructure. This sharp increase highlights the escalating scale of the damage.

Nature and Cause of Damage

The consultancy reports that the damage has accumulated over a seven-week period, stemming from air strikes and drone attacks. The affected infrastructure is extensive, including:

• Refineries
• Processing plants
• Pipelines
• Storage facilities
• Other critical energy assets

Primary Constraints on Repairs

The analysis identifies that the main hurdle is not funding, but a critical shortage of resources. Key challenges include:

• A scarcity of specialized equipment and qualified contractors.
• The need to redirect equipment and labor crews from new construction projects to repair work.
• Intense competition among damaged facilities for a limited pool of specialized labor.

"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."

This redirection is expected to delay timelines for bringing new energy capacity online globally.

Variable Repair Timelines

Repair impact and pace will vary significantly across the region.

• Faster Repairs: Facilities in more accessible countries with available contractors could begin work within weeks.
• Prolonged Timelines: Repairs on complex facilities, such as Qatar's Ras Laffan LNG complex, could take much longer to initiate due to shortages of specialized parts, equipment, and labor.

Analyst Commentary

Karan Satwani, a senior supply chain research analyst at Rystad Energy, emphasized the broader implications:

• "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 $58 billion bill is the headline, but the knock-on effects on energy investment timelines globally may prove just as significant."