Here's how much it could cost to fix Mideast oil and gas production damaged by the Iran war

By Claudia Assis

Rystad Energy puts the price tag on eventual repairs to energy infrastructure in the tens of billions of dollars

The Ras Laffan complex in Qatar.

The damage to oil-and-gas infrastructure in the Middle East caused by the war with Iran will take years and billions of dollars to repair, which would hamper efforts to fully restore production even if the conflict were to end soon.

Analysts at Rystad Energy are among the first to put a price tag on estimates to fix it: at least $25 billion, and very possibly more.

With the conflict now in its fourth week, crude-oil futures (CL00) (BRN00) headed lower and U.S. stocks gained Wednesday on hopes that a U.S. cease-fire proposal would get traction in Tehran and de-escalation could ensue.

"Markets are seizing with both hands any notion that this war will not intensify further and drag out longer and land the global economy in a ditch," analysts at Piper Sandler said in a note.

The reported talks halted the "dangerous escalation spiral of hitting energy assets around the Gulf," they noted.

Such strikes derailed Qatar's liquefied-natural-gas (LNG) production, as they hit the country's Ras Laffan complex. That is the "clear outlier" in the Rystad calculations.

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QatarEnergy has said that the complex suffered extensive damage from missile attacks last week. The Qataris estimated up to five years of repairs and about $20 billion a year in lost revenue. Ras Laffan accounts for 5% of global natural-gas production and 20% of the world's LNG production.

Very few companies make the massive gas turbines required to power LNG main refrigeration compressors, including GE Vernova (GEV) and Germany's Siemens (XE:SIE) (SIEGY). Such companies work with production backlogs stretching two to four years, thanks to demand from data-center electrification and the retirement of coal plants, the Rystad analysts noted.

Beyond the near-standstill of tanker traffic through the Strait of Hormuz, "every day of damaged or shut-in infrastructure pushes prewar production capacity further out of reach," the analysts said.

Another concern is Bahrain's Sitra Refinery, which was struck twice earlier in the conflict. The constraint there is not equipment shortages or sanctions, but the timing of the damage relative to the asset's investment cycle, according to Rystad.

The facility had just reached mechanical completion under a $7 billion modernization program in December, and contractors were still onsite finalizing ramp-up obligations when the attacks occurred. The destruction of a newly commissioned facility just months after first production delays revenue intended to support the recent investment, the Rystad analysts said.

"Restoring the units will likely require international contractors to be remobilized at conflict-inflated costs and under uncertain war-risk insurance," they said.

There have also been modest to minor disruptions in the United Arab Emirates, Kuwait, Iraq and Saudi Arabia. The closer the country is from a pool of engineers and contractors, the better, the Rystad analysts noted. For example, state-owned Saudi Aramco (SA:2222) was able to restart its Ras Tanura complex relatively fast, as maintenance teams were already on site for planned maintenance as the facility was hit by debris.

Operators also are likely to prioritize restoring existing fields instead of new developments, creating demand for contractors and equipment makers, "especially those with regional experience and existing agreements with national oil companies," the analysts said.

Related to the work of restoring facilities is the work of restarting production wells that may have been shut in during the conflict as exports slowed to a trickle.

An eventual rebound in oil and gas production in the Middle East would also favor U.S. oil-field service companies. "Shut-ins take time to restart while production usually returns at lower levels, increasing production-related work," analysts at Melius said in a recent note.

The VanEck Oil Services ETF OIH rose 0.7% in recent midday trading, to put it on track for its highest close since November 2018.

The U.S. is home to several major oil-field services companies, and Melius singled out Weatherford International (WFRD) and SLB (SLB) as the "best positioned" in the space to benefit from an eventual recovery - as 43% and 34% of their revenues, respectively, are exposed to the Middle East.

-Claudia Assis

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03-25-26 1304ET