Published on: December 10, 2019
The global oil and gas (O&G) market includes companies engaged in the exploration and production of O&G, and also comprises companies involved in the transportation, storage, refining, marketing, and distribution of O&G products.
Based on project type, onshore projects dominate the global O&G market. North America is expected to dominate the global O&G market by region during the forecast period. Advancements in automation and Internet of Things (IoT) technology are encouraging investments in onshore and offshore O&G projects in North America. Trends such as the development of automated drilling rigs are expected to boost overall production efficiency and aid market growth during the forecast period.
Many factors are expected to influence growth in the global O&G market during the forecast period. Our analysis identifies the following factors to be driving the growth of the global O&G market:
The moderate recovery in crude oil prices since 2017 has spurred a growth in O&G extraction projects in countries such as the US, Saudi Arabia, Oman, and Kuwait. Owing to factors such as limited production of crude oil in key oil-producing countries such as the US and Russia, and geopolitical factors such as the US-China trade war, oil prices have witnessed considerable stability in 2019. Additionally, the restoration of oil production facilities in Saudi Arabia to full capacity is expected to cater to the demand for O&G worldwide at stable prices during the forecast period.
Natural gas is the least polluting among all fossil fuels and is expected to replace coal and crude oil as the primary fossil fuel and feedstock in the global power generation, chemicals and petrochemicals market, respectively. Countries such as the UK and France have already announced to phase out coal for power generation in the next few years. Also, natural gas is a cheap feedstock to produce chemicals and petrochemicals. In addition, large and untapped natural gas reserves in countries such as the US, Australia, Qatar, and Iran are expected to keep global natural gas supplies abundant and its prices steady.
O&G companies are finding innovative and efficient ways of improving the recovery of hydrocarbons from mature fields. For instance, workover of the wells improves recovery from a mature oil field substantially. Workover is a well-intervention method, carried out by a hydraulic workover unit, to modify the well to achieve optimal production. Many O&G companies have started workover operations on mature oil fields to enhance O&G production. The use of equipment and technologies used for enhanced O&G production from mature O&G fields is expected to aid market growth during the forecast period.
Meanwhile, the vendors operating in the market face numerous challenges in increasing their sales and improving profitability. Some of those challenges are:
Countries that are major consumers of O&G such as China, India, and Japan, are taking policy initiatives to promote the use of renewable energy sources such as wind and solar power to check unfettered use of O&G for power generation. For instance, in 2015, the Indian government announced to increase installed renewable power generation capacity from 38 GW in 2015 to 175 GW by 2022. A shift toward renewable energy helps the countries to boost their energy security by reducing reliance on imported crude oil and gas. Thus, a large shift toward renewable sources may impact demand for O&G for power generation and negatively impact the global O&G market.
In offshore O&G projects, drilling is performed below the seabed and this entails many complexities. For instance, custom-designed offshore rigs are required to be built and transported to wells. In addition, precautions are required to be taken to ensure minimum damage to marine life and the ecosystem. Also, very reliable and corrosion-resistant equipment are needed as they are subjected to harsh operating environment and seawater. Maintenance of offshore surface equipment including subsea equipment in the marine environment and drastic variations in subsea weather conditions increase operational challenges. Therefore, complexities involved in offshore O&G production may impact market growth during the forecast period.
Multilateral financial institutions such as the World Bank Group and IMF have traditionally played a key role in financing O&G projects, especially in developing countries such as India and Nigeria. However, in December 2017, the World Bank Group announced to stop funding for new O&G projects 2019 onwards as a measure to discourage the use of fossil fuels and encourage adoption of renewable energy, with exception only in instances when an O&G project in an impoverished country helps expand energy access and is in line with the country’s Paris Agreement commitments. Other multilateral financial institutions such as the IMF and ADB are also expected to take a similar approach and subsequently negatively affect market growth.
The global O&G market can be segmented into the following:
The global O&G market is moderately concentrated with the presence of international and regional players. We provide a detailed analysis of around 25 vendors operating in the global O&G market, including some of the prominent vendors such as Saudi Aramco, Exxon Mobil Corp., Royal Dutch Shell, BP Plc, and Sinopec Ltd. Mergers, acquisitions and divestitures, and investments in new facilities are among the strategies adopted by manufacturers in the global rice market.
Backed with competitive intelligence and benchmarking, our global O&G market research report is designed to provide entry support, customer and M&A assessment, as well as go-to-market strategy support.
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