Middle East conflict inflicts $25 billion in damage on energy infrastructure

The Middle East conflict has generated energy infrastructure repair and restoration costs estimated at least $25 billion, according to research firm Rystad Energy. This destruction of strategic production capacity is disrupting global energy markets, in a context where alternative supply corridors — such as the Algeria-Spain gas alliance around the MedGaz pipeline — are gaining in strategic importance. The speed of regional recovery will depend, according to analysts, on execution capacity and the timing of capital deployment.

Qatar: 12.8 million tonnes per year of LNG capacity lost at Ras Laffan

The destruction of liquefied natural gas (LNG) trains S4 and S6 at Ras Laffan Industrial City in Qatar illustrates the scale of the disruptions sustained. These two units represent a 17% capacity loss totalling 12.8 million tonnes per annum, and have triggered a force majeure. Rystad Energy indicates that recovery cannot bypass a restoration timeline of up to five years, as only three manufacturers worldwide produce the essential large-frame gas turbines required for refrigeration systems. In a global gas sector under structural pressure, operators are proceeding in parallel with asset divestments, as illustrated by EDF's sale of the Norte Fluminense gas plant for 230 million euros.

Supply constraints on specialised equipment mechanically limit the pace of reconstruction, regardless of the volume of capital deployed. Dependence on a limited number of suppliers heightens the risk of further delays beyond current estimates. This structural bottleneck represents, according to Rystad Energy, the primary obstacle to a rapid capacity recovery in the region.

Bahrain: BAPCO Sitra refinery struck following a $7 billion modernisation

In Bahrain, BAPCO's (Bahrain Petroleum Company) Sitra refinery faces a distinct situation. Two strikes on crude distillation units (CDUs) and a tank farm have triggered a group-wide force majeure. "The primary hurdle is not a lack of equipment, but the catastrophic timing of the damage following a $7 billion modernisation program that reached mechanical completion only last December," Rystad Energy states.

The destruction occurred just months after first production, stripping the refinery of its new processing capacity and the revenue needed to service its massive investment. Restoration now requires re-mobilising international contractors at conflict-inflated costs. The refinery must also navigate an uncertain war-risk insurance market for assets that had barely completed their transition into operation.

Reconstruction: sectoral priorities and the impact of Iranian sanctions

Rystad Energy estimates that operators are likely to prioritise restoring existing fields rather than developing new projects, as repair spending ramps up. This orientation creates demand for engineering, procurement and construction (EPC) contractors and original equipment manufacturers. Continued sanctions against Iran would limit access to Western contractors and technology, leaving domestic and East Asian players to capture most recovery-related activity in the region.