Market Trends of North Sea Oilfield Equipment Industry
This section covers the major market trends shaping the North Sea Oilfield Equipment Market according to our research experts:
Increasing Investments in Gas Sector Expected to Drive the Market Demand
- European gas demand is expected to continue to increase in the coming years as the region is enduring a partial cutoff of natural gas exports from Russia, the region's largest energy supplier. Additionally, in the power sector, the gradual phase-out of nuclear, coal, and lignite-fired power generation capacity is likely to boost the demand for gas-fired power plants during the forecast period.
- In recent years, Europe has witnessed an increase in its LNG imports. In 2021, the region imported around 108.2 billion cubic meters (bcm) of LNG, which almost doubled from 56.4 bcm in 2016. Further, from January 2022 through May 2022, the LNG imports into the European Union and the United Kingdom averaged 14.9 Bcf/d, which is 5.9 Bcf/d (66%), more than the annual average in 2021, and this scenario is likely to continue in the coming years.
- Therefore, to meet the demand and offset the production decline from maturing assets, investment in new oil & gas fields is being undertaken by the operator in the North Sea. These new project sanctions are likely to have a direct impact on increased drilling activity over the next few years.
- In March 2022, Shell released an amended plan to develop a major North Sea gas field that British regulators initially rejected in 2021 on environmental grounds. Shell has stated in the new ecological development plan of the Jackdaw field that it aims to start production from the area, which will supply 6.5% of Britain's gas output, by Q3 or Q4 2025.
- Further, in June 2022, the Netherlands and Germany plan to develop and exploit a new gas field in the North Sea to help secure gas supply as Europe tries to wean itself off Russian fossil fuels. According to the Dutch government, the production at the field, about 19 km off the north coast of both countries, is expected to start by the end of 2024. Therefore, the development of new fields is likely to propel the North Sea oilfield equipment market growth during the forecast period.
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Norway to Witness Significant Growth
- Norway had several oil and gas discoveries in the past few years, including the giant Johan Sverdrup field. In May 2016, the Norwegian Ministry of Petroleum and Energy announced awards in the 23rd licensing round in frontier areas, granting ten new licenses consisting of 40 blocks. Three of the licenses are placed in the newly opened area in the Barents Sea.
- The country is witnessing significant activities in the oil and gas industry that is likely to aid the growth of the oilfield equipment market. In March 2022, the Norwegian Petroleum Directorate granted ConocoPhillips Skandinavia a drilling permit for a wildcat well located offshore Norway. This is likely to support the growth of the oilfield equipment market.
- In January 2022, the Norwegian Ministry of Petroleum and Energy offered 28 companies ownership interests in 53 offshore oil & gas production licenses on the Norwegian Shelf in the Awards in Predefined Areas(APA) 2021. This is expected to usher in new growth in the oilfield equipment markets when the reservoir development starts.
- Further, in April 2022, Norwegian firm Equinor and its partners made a significant oil and gas discovery in the Kveikje prospect in the Norwegian North Sea. According to the estimates by Equinor's partner, Longboat Energy, the recoverable resources in the Kveikje Main target stand at 28 to 48 million barrels of oil equivalent (MMboe), which is above pre-drill expectations. Such a massive discovery is expected to create enormous opportunities for oilfield equipment players in the coming years.
- Therefore, owing to the above-mentioned points, Norway is expected to witness significant growth in the North Sea oilfield equipment market during the forecast period.
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