Oil & Gas EPC Market
Oil & Gas EPC Market (Sector: Upstream [Offshore and Onshore], Downstream, and Midstream; and Service: Engineering, Procurement, Construction, and Fabrication) - Global Industry Analysis, Size, Share, Growth, Trends, and Forecast, 2019 - 2027
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Companies Aim to Improve Supply-Demand and Formulate New Business Models
The oil & gas sector has witnessed significant transformation in the past few years and is showing no signs of slowing down in that regard. The oil & gas industry has successfully negotiated its way through the slump in crude oil prices post 2014-2015. While the oil & gas sector continued to make strides, oil & gas EPC market has witnessed significant development as well. Stakeholders in the oil & gas EPC market are focusing on improving break-even points, adoption of newer technologies, and fulfilling the growing demand for energy worldwide.
The last couple of years witnessed significant growth in the number of onshore and offshore oil & gas activities. Offshore project sanctioning is expected to gain significant momentum during the forecast period (2019-2027) and is on course to generate record-high revenues. Moreover, engineering and procurement projects are set to present a plethora of opportunities for stakeholders involved in the oil & gas EPC market. Market participants are expected to leverage advanced technologies to improve supply-demand and formulate impactful business models, as the energy sector continues to evolve. Due to these factors, the oil & gas EPC market is expected to reach a value of ~US$ 64.7 Bn by the end of 2027.
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Stakeholders in Oil & Gas EPC Market Seek Solutions to Address Key Challenges
The growth of the oil & gas sector is marred by a host of unpredictable and volatile factors, including economic and geopolitical uncertainties, evolving global markets, regulatory limitations, etc. These factors have played a key role in persuading stakeholders in the oil & gas EPC market to adopt a dynamic approach for their processes and operations. In the current scenario, oil & gas EPC companies are seeking solutions to address a range of challenges, including dwindling fuel consumption, growing adoption of electric vehicles, stringent regulatory and environmental policies, snowballing costs of upstream and exploration projects, etc.
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Companies in the current market landscape are focusing on building effective procurement strategies that will assist them in saving costs, improving supplier relationships, enhancing spending efficiency, and simultaneously dealing with risks involved in supply chain. While upstream businesses are no stranger to cost-reduction tactics, at the back of the mounting environmental concerns, market players are leveraging the benefits of digital technologies and finding new sustainable growth avenues. The upstream sector segment is projected to reach a value of ~US$ 26.1 Bn and account for ~ 58% share of the oil & gas EPC market in 2020.
Companies Focus on Supply Chain Performance and Expanding Operations
Within the oil & gas EPC market, stakeholders are aiming to expand their market share and values by turning toward organic and inorganic strategies. While some stakeholders are launching new oil & gas networks, others are tapping into opportunities presented by offshore and onshore projects. For instance, in August 2019, Achilles launched a new oil & gas supplier network for the European region in which around 6,000 suppliers were integrated into a single supply chain. The adoption of such digital technologies is expected to play an important role in improving the supply chain of all oil & gas companies in the European region.
In September 2018, Adnoc awarded a ~US$ 860 Mn contract for the expansion of a gas development project. As per the agreement, Adnoc LNG, a subsidiary of the Abu Dhabi National Oil Company, awarded the contract to Target Engineering Construction Company and Tecnicas Reunidas for the provision of construction, procurement, and engineering services for phase two of the Integrated Gas Development Expansion project. As per the agreement, the two companies will manage equipment & material supply, installation, construction, engineering, drying, and an array of other auxiliary services. The rise of digital technologies has paved the way for digital procurement in the oil & gas EPC market in recent years, and the trend is projected to continue particularly in the Middle East & Africa and the Asia Pacific. While stakeholders in the oil & gas sector continue to find alternatives to streamline their supply chain, digital procurement solutions have emerged as an ideal candidate to address these problems.
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The oil & gas EPC market is expected to grow at a CAGR of ~5% during the forecast period. Some of the key factors that are expected to influence growth include rise in the number of offshore and onshore projects, technological advancements, project sanctioning, and growing focus on improving the supply chain. Digital technologies will play a key role in improving supply chain performance and mitigate the risks involved in the supply chain. Digital procurement is likely to gain significant popularity during the forecast period, as more number of companies are leaning toward digital technologies to strengthen their foothold in the oil & gas EPC market.
Oil & Gas EPC Market: Overview
- Engineering and construction contractors carry out the detailed design and layout of a project, procurement of materials and equipment, manufacturing of systems, functional testing, and finally deliver a functioning asset or facility to their clients. Sometimes, oil & gas EPC contactors also enter into a service contract with clients.
- EPC services are used by several oil & gas companies. Oil & gas EPC services are primarily employed in long-term projects that entail complex construction, stringent regulations, and a wide network of contractors and suppliers.
Rise in Deepwater E&P Activities to Drive Oil & Gas EPC Market
- The usage of renewable sources of energy has been rising gradually. However, demand for oil and gas has not declined. Renewable sources of energy help provide clean power. However, it is yet to become a reliable power source, as it requires backup power in the form of hybrid power plants. Growth in population and industrial developments are boosting the global demand for energy.
- Global consumption of fuel increased in 2018. For instance, oil consumption rose by 1.4 million barrels per day, while natural gas consumption increased by 195 billion cubic meters per day. This rise in demand for fossil fuel is compelling companies to increase the production of fuel.
- Oil & gas companies have begun exploring new areas, including operations in more remote and deeper offshore areas, owing to the less number of easy-to-access oilfields. As a result, rise in deepwater and ultra-deepwater exploration & production (E&P) activities is driving the oil & gas EPC market.
Volatility in Prices of Crude Oil to Hamper Oil & Gas EPC Market
- Prices of crude oil are affected by events that can potentially disrupt the supply of oil and gas. These include geopolitical and weather-related issues. Geopolitical events play a significant role in creating uncertainty about the demand or supply of oil and gas. This can lead to higher volatility in prices of oil and gas.
- The Middle East accounts for major share of oil and gas. It is a highly unstable region due to political issues. Prices of oil and gas have been rising steadily after the decrease in prices of crude oil in 2014.
- Volatility in prices of oil effects the production of oil and gas. This is expected to hamper the oil & gas EPC market during the forecast period.
Large Number of Proven Oil & Gas Reserves to Offer Lucrative Opportunities to Oil & Gas EPC Market
- According to annual statistics of the Organization of the Petroleum Exporting Countries (OPEC), 1,492.6 billion barrels of proven crude oil reserves are currently available on a global scale. Of these, more than 80% reserves are under the control of OPEC.
- Led by the boom in shale gas, North America, especially in the U.S., is on track to become the leader in terms of production of oil and gas by 2025
- Thus, large amount of proven oil & gas reserves across the globe is expected to provide significant opportunities to providers of oil & gas EPC services during the forecast period
Recent Developments, Expansions, Acquisitions, and New Contracts
- In October 2018, Fluor Corporation, the U.S.-based oil & gas EPC firm, was awarded the engineering, procurement, and construction of the combined heat and power cogeneration project by Valero Energy Corporation at the latter’s Pembroke Refinery in Wales, the U.K.
- In October 2018, TechnipFMC, a leading oil & gas EPC company, signed an EPC agreement with Middle East Oil Refinery for modernization and expansion of the latter’s existing units and delivery of new units, including a hydrogen production facility, a vacuum distillation unit and a crude distillation unit
North America to Dominate Oil & Gas EPC Market
- North America dominated the global oil & gas EPC market in 2018. The oil & gas EPC market in the region is estimated to expand at a significant pace during the forecast period, due to the ongoing investments in exploration and production of unconventional resources such as shale & tight gas.
- Europe also accounted for considerable share of the global oil & gas EPC market in 2018. Increase in spending on refurbishment and modernization of existing refinery facilities to meet the domestic demand for low sulfur containing petroleum products is anticipated to propel the oil & gas EPC market in the near future.
- The oil & gas EPC market in Asia Pacific is projected to expand at a moderate pace during the forecast period. This growth of the oil & gas EPC market in Asia Pacific can be ascribed to the rise in demand for primary energy, supported by strong economic growth and rapid industrialization & urbanization in the region.
- The oil & gas EPC market in Middle East & Africa is likely to expand at a significant pace during the forecast period. Growth of the oil & gas EPC market in the region can be ascribed to the high potential of untapped oil & gas reserves in the region. As per BP stats, Middle East & Africa had 129.8 thousand million tons of proven reserves of crude oil in 2018.
Oil & Gas EPC Market Highly Competitive
- The global oil & gas EPC market is dominated by large multinational players. Key players operating in the global oil & gas EPC market are
- TechnipFMC, Plc.
- WorleyParsons Limited
- Saipem SpA
- Petrofac Limited
- Bechtel Corporation
- Mott MacDonald
- Fluor Corporation
- L&T Hydrocarbon Engineering
- John Wood Group PLC
- National Petroleum Construction Company
- SNC-Lavalin Group
- KBR, Inc.
- Galfar Engineering
- Contracting SAOG
- Oil & gas EPC companies are adopting several strategies such as mergers & acquisitions and investments in new discoveries to enhance their market presence across the globe
Oil & Gas EPC Market – Scope of Report
The latest study collated and published by Transparency Market Research (TMR) analyzes the historical and present-day scenario of the global oil & gas EPC market to accurately gauge its future growth. The study presents detailed information about important growth factors, restraints, and key trends that are creating a landscape for future growth of the global oil & gas EPC market in order to identify growth avenues for market stakeholders. The report also provides insightful information about how the global oil & gas EPC market would expand during the forecast period of 2019–2027.
The report offers intricate dynamics about different aspects of the global oil & gas EPC market, which helps companies operating in the market in making strategic business decisions. TMR’s study also elaborates on significant changes that are anticipated to configure growth of the global oil & gas EPC market during the forecast period. It also includes assessment of key indicators that highlights growth prospects for the global oil & gas EPC market and estimates statistics related to the market growth in terms of value (US$ Mn).
This study covers detailed segmentation of the global oil & gas EPC market along with key information and a competition outlook. The report mentions company profiles of players that are currently dominating the global oil & gas EPC market, wherein various developments, expansions, and winning strategies practiced and executed by these players have been presented in detail.
Key Questions Answered in TMR’s Report on Global Oil & Gas EPC Market
The report provides detailed information about the global oil & gas EPC market on the basis of comprehensive research on various factors that are playing a key role in promoting growth of the market. Information mentioned in the report answers path-breaking questions for companies that are currently operating in the market and are looking for innovative methods to create a unique benchmark in the global oil & gas EPC market so as to help them design successful strategies and make target-driven decisions.
- How are key market players successfully earning revenues in the competitive global oil & gas EPC market?
- What would be the Y-o-Y growth rate of the global oil & gas EPC market between 2019 and 2027?
- What are the winning imperatives of leading players operating in the global oil & gas EPC market?
- Which sector segment of the global oil & gas EPC market is expected to offer the maximum growth potential during the forecast period?
- Which service segment is anticipated to provide the maximum growth potential during the forecast period?
Research Methodology – Oil & Gas EPC Market
The research methodology adopted by analysts for compiling the global oil & gas EPC market report is based on detailed primary as well as secondary research. With the help of in-depth insights of the market-affiliated information obtained and legitimated by market-admissible resources, analysts have offered riveting observations and authentic forecasts of the global oil & gas EPC market.
During the primary research phase, analysts have interviewed market stakeholders, investors, brand managers, vice presidents, and sales & marketing managers. Based on the data obtained through interviews with genuine resources, analysts have emphasized the changing scenario of the global oil & gas EPC market.
For secondary research, analysts have scrutinized numerous annual report publications, white papers, market association publications, and company websites to obtain the necessary understanding of the global oil & gas EPC market.
Oil & Gas EPC Market – Segmentation
TMR’s research study segments the global oil & gas EPC market in terms of sector, service, and region. This report presents extensive market dynamics and growth trends associated with different segments and explains how they are influencing the growth of the global oil & gas EPC market.
Middle East & Africa