Oil & Gas EPC Market - Growth, Trends, and Forecast (2020 - 2025)
The market is segmented by Sector (Upstream, Midstream, Downstream), and Geography (North America (Untied States, Canada, and Rest of North America), Europe (Russia, United Kingdom, Norway, and Rest of Europe), Asia-Pacific (Australia, China, India, Indonesia, and Rest of Asia-Pacific), South America (Brazil, Argentina, and Rest of South America), and Middle-East and Africa(Saudi Arabia, Qatar, Egypt, and Rest of Middle-East and Africa))
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Scope of the Report
Key Market Trends
TABLE OF CONTENTS
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The market for oil & gas EPC is expected to grow at a CAGR of more than 5.35% during the forecast period of 2020 – 2025. Major factors driving the market studied are the declining operating costs of oil & gas fields, expansion in the downstream sector, increasing demand for LNG infrastructure, among others. However, surge in the transportation of oil and gas via. the alternate mode of transportation is likely to reduce the investments in the development of pipeline infrastructure, which is anticipated to restrain the market for oil and gas EPC in coming the years.
The upstream sector accounted for more than half of the market share, in 2018, and is expected to dominate the oil and gas EPC market during the forecast period. In 2018, the number of FIDs (for reserves of volume more than 25 million boe, excluding shale/tight) in upstream sector increased by more than 80% compared to 2016.
Factors, such as technological improvements and increasing viability of deepwater and ultra-deepwater projects, several new markets, such as Gabon, Senegal, Guyana, Trinidad & Tobago, Egypt, and the Mexican side of the Gulf of Mexico are actively promoting the development of deepwater and ultra-deepwater reserves. This, in turn, is expected to create significant opportunities for the operating countries in the near future.
Expansion of downstream infrastructure, in Asia-Pacific, is expected to result in the significant demand for EPC services in the coming years. China and India are expected to add large refining capacity in the coming years.
Scope of the Report
The oil & gas EPC market report includes:
Rest of North America
Rest of Asia-Pacific
Rest of Europe
Middle-East and Africa
Rest of Middle-East and Africa
Rest of South America
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Key Market Trends
Upstream Sector to Dominate the Market
In the oil and gas upstream sector, the EPC market has been primarily driven by the onshore segment, mainly due to lower investment requirement, lesser complexity, easier access to sites, and lower risk, compared to the offshore segment.
Shallow water drilling operations in the last few years have been severally affected, mainly due to the maturing of oil and gas fields in the shallow water. The decline in crude oil prices, in parallel with the maturing of fields in the shallow water, has negatively impacted the demand for EPC services. As a result, the upstream oil and gas industry is moving toward the deep-sea regions for exploration and production activity, in recent times.
Brazil is one of the key markets for deepwater oil and gas projects. The Brazilian oil and gas market is driven by successful regulatory changes and improving financials. The Brazilian government is aiming two MMb/d of additional oil production by 2027, mostly from deepwater areas.
Moreover, exploitation of shale reserve has led to increase in demand for EPC services. It is led by the United States, followed by Canada. The global demand for natural gas is also expected to increase by 1.6% a year between 2016 and 2022, with additional consumption of 370 billion cubic meters by 2022, up from 3630 bcm in 2016. Hence, upstream segemnet is expected to be the largest segment for the oil and gas EPC market.
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North America Region to Dominate the Market
With the increasing number of oil & gas projects in countries such as the United States, Canada, and Mexico, the region is likely to witness robust growth in the coming years. The United States is one of the largest producers of crude oil and natural gas, accounting for around 14.1% and 20.0% of the global production, respectively, in 2018. The production surged in 2017, mainly due to robust drilling in its shale reserves, led by Permian basin.
United States has one of the largest, technically-recoverable shale gas reserves and the second-largest tight oil reserves in the world. The technological developments in hydraulic fracturing and low breakeven prices have supported the upstream oil and gas activity in the onshore region, resulting in high demand for EPC companies.
Canada is one of the largest producers of oil and gas in the world. The oil and gas industry plays an important role in the country’s economy. Oil sands remain its primary source of hydrocarbon production, comprising over 90% of the country's total oil reserves. As per the Canadian Association of Petroleum Producers (CAPP), the oil production in the country is expected to reach 5.4 billion bbl/d in 2030, and oil sands are expected to account for 70.7% of the total production.
The aforementioned factors are contributing to the increasing demand for oil & gas EPC services in the region during the forecast period.
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The oil and gas EPC market is fragmented. The major companies include Saipem SpA, TechnipFmc PLC, Petrofac Limited, Fluor Corporation, and Bechtel Corporation.