Rising Costs of War: Gulf Energy Infrastructure Stares Down $25B Repair Bill

Wednesday, March 25, 2026

War in the Middle East has 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. According to Rystad Energy’s estimates, energy infrastructure repair and restoration costs to date could reach at least $25 billion, based on an initial assessment of impacted facilities, and are expected to rise further.

Spending is likely to be driven primarily by engineering and construction, followed by equipment and materials.

In assessing repair costs and full restoration timelines across severity tiers, one clear outlier emerges in Qatar’s Ras Laffan Industrial City, where the destruction of LNG trains S4 and S6 has triggered force majeure and a 17% capacity reduction, equivalent to about 12.8 million tonnes per annum (Mtpa). However, capital alone will not be sufficient to restore the facility, with a full recovery taking up to five years. 

This is because the large-frame gas turbines required to power LNG main refrigeration compressors are supplied by only three original equipment manufacturers (OEM) globally, all of which entered 2026 with production backlogs of around two to four years, driven by demand from data center electrification and coal plant retirements.

“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. Iran’s South Pars offshore field and Qatar’s Ras Laffan facility stand out as particularly concerning cases. 

"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. Urgent repairs will have to take precedence in place of planned expansion,” said Audun Martinsen, Head of Supply Chain Research at Rystad Energy.

(Credit: Rystad Energy)

Looking beyond Qatar, neighboring Bahrain represents another distinct disruption scenario. The BAPCO Sitra Refinery was struck twice, causing confirmed damage to two crude distillation units (CDU) and a tank farm, with force majeure declared across group operations. Here, the constraint is not equipment shortages or sanctions, but the timing of the damage relative to the asset’s investment cycle. 

The facility had just reached mechanical completion under its $7 billion modernization program in December last year, with engineering, procurement and construction (EPC) contractors still onsite finalizing ramp-up obligations when the attacks occurred. 

The destruction of a newly commissioned CDU block just months after first production has eliminated novel processing capacity, delaying the revenue intended to support the recent investment. Restoring the units will likely require international contractors to be re-mobilized at conflict-inflated costs and under uncertain war-risk insurance, as the damaged assets had only recently come online.

There were also moderate-to-minor disruptions in other countries, including the UAE, Kuwait, Iraq and Saudi Arabia. Across all impacted facilities, the factor that most consistently shapes recovery trajectories is the density and proximity of the domestic EPC ecosystem surrounding each asset – an often-underestimated variable in conventional damage assessments. 

Saudi Aramco’s rapid restart at Ras Tanura, where maintenance teams were already onsite for a planned turnaround when debris fell inside the perimeter, provides the clearest example of the advantages enabled by deep domestic capability.

(Credit: Rystad Energy)

The speed of recovery in the region will depend on execution capacity and capital deployment timing, as repair spending ramps up. Operators are likely to prioritize restoring existing fields instead of new developments, creating demand for EPC contractors and OEMs, especially those with regional experience and existing agreements with national oil companies. 

Near-term work will most likely focus on inspection, engineering and site preparation, followed by equipment replacement and construction as procurement constraints ease. In Iran, continued sanctions would limit access to Western contractors and technology, leaving domestic and East Asian players to capture most recovery-related activity.


(Analysis provided by Rystad Energy)

Categories: Finance Middle East Industry News Activity Production Asia Infrastructure Oil and Gas War Strait of Hormuz

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