Tuesday 8 March 2016

Uncertainties in Oil and Gas Market to Negatively Impact Demand for Static and Rotating Equipment

The demand for a variety of static and rotating equipment has surged in the last decade, thanks to vast investments in remote oil and gas locations and a significant rise in offshore oil exploration activities. Demand in the shale oil and gas section has especially been higher in the past years. Similarly, rapid development has been observed in the offshore drilling sector, which has now emerged as one of the major producers of oil and gas in the global market. These factors created niche opportunities for manufacturers of static and rotating equipment for the oil and gas industry. To cash in on the growth opportunities in this sector, manufacturers have come up with specialized equipment with robust capabilities and specifications that can withstand extreme temperatures and high pressures.

But the demand from unconventional drilling activities for static and rotating equipment was adversely impacted during the the oil industry crash of 2008-2009 and yet again during the downturn of 2014-2015. The falling oil prices led to a significant reduction in the number of new oil exploration projects, and presented a difficult growth path for suppliers.


Analysts Predict Bleak Growth Prospects for Market

Market analysts predict that the downward trend in oil prices is here to stay for some more time. The unresolved issue of a glut in oil production, the declining demand for oil in the global market, and the rising preference for the use of alternative power sources are projected to adversely impact the dynamics of the global oil market. The situation is projected to lead to a significant decline in demand for static and rotating equipment in the near future.

A market research report published by Transparency Market Research states that the global market for static and rotating equipment for the oil and gas industry will expand at a meagre 3.7% CAGR over the period between 2014 and 2022. The uncertainties in oil and gas prices, production values, and demand on a global front will be responsible for the bleak growth opportunities before the global static and rotating equipment market.

Diversifying Operations to Enable Vendors to Overcome Growth Challenges

However, analysts also suggest that as the market comes back to a steady growth path, cancelled or stalled projects will becomes operational again in the near future. This will lead the global static and rotating market to a steady growth pace. Until then, market vendors need to explore various exploration activities and diversify more into downstream exploration activities to survive the bleak growth opportunities.

As the trend of using energy-efficient technologies and drilling equipment grows with oil and gas companies looking to cut expenses, introduction of advanced equipment can provide growth opportunities for static and rotating equipment manufacturers.

Some of the major vendors in the market are FMC Technologies Inc., Alfa Laval AB, Sulzer Limited, Pentair plc, Metso Oyj, Siemens AG, Flowserve Corporation, General Electric Company, Atlas Copco AB, Mitsubishi Heavy Industries Ltd., Tenaris SA, Technip SA, Doosan Group, and Wärtsilä.

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