Rystad estimates that Middle East war damages to energy assets could cost as much as $58 billion.
According to Rystad Energy, the Middle East conflict may cost up to $58 billion to repair energy-related infrastructure. Oil and gas facilities could account for as much as $50 billion.
The initial estimate of $25 billion by the research firm three weeks ago has been surpassed, reflecting the broader extent of the damage caused before the ceasefire on April 8, between the U.S.
Repair work does not create new capacity. It redirects the existing capacity and this redirection is?felt by project delays as well as inflation outside of the Middle East, according to?Rystad Senior Analyst Karan Satwani.
The $58 billion bill may be the most important, but its knock-on effect on global energy investment timelines could prove to be just as significant.
Rystad estimated that total repair spending would be averaging around $46 billion. The largest portion of the cost will come from downstream refining assets and petrochemicals due to their complexity.
The report said that industrial, power and desalination equipment could add an additional $3 billion to 8 billion dollars in costs.
Rystad said that recovery?timelines have started to diverge depending on the assets and country. This is due to differences in execution capabilities at home and access to supply chains.
Iran is the country that has suffered the most extensive damage. Repair costs could reach $19 billion. This includes infrastructure for gas processing, refinement and export.
Qatar's impact, on the other hand, is concentrated, but technically complex. This is especially true at Ras Laffan, its industrial hub, where repairs may overlap with ongoing LNG projects.
Rystad stated that the majority of expenditures will be on engineering and construction, but delays in acquiring critical equipment are likely to dictate recovery timelines.
Rystad says that the greatest challenge is to find workers and equipment. (Reporting and editing by Leroy Leo in Bengalurul, Pranav Mathur)
(source: Reuters)
