Demand for oil and natural gas continues to grow despite the current economic downturn, indicating a positive future outlook for oilfield services, according to a new report by business intelligence expert GBI Research.
The new report* shows that, for the most part, the global oilfield services industry has grown exponentially over recent years, witnessing a rapid increase in revenue and advancement in technologies. Increased exploration and production activities have seen the discovery of reserves in new regions, necessitating an expansion in oilfield services.
A significant rise in unconventional plays within the North American region has necessitated an increase in the demand for pressure pumping services, which are currently driving the capital expenditure of oilfield services. This will come as a much-needed boost to operators, who may have been affected by the cuts in exploration and production activity following the global financial crisis and Deepwater Horizon incident in the US Gulf of Mexico (USGOM), which resulted in the implementation of regulatory stringency plans worldwide. Since then, operations have been accelerating, with a steady rise expected until 2016.
Recent discoveries of promising fields not yet in production will provide a cushioning effect for any reverberations felt from the economic crisis, with the future for the oilfield services industry looking optimistic as a result of technology advances and fresh methods of tapping unconventional reserves. Such innovation is generating confidence in the performance of the oilfield services industry, and growth resumption is anticipated for 2012-2013. Long-term projects may therefore face postponement, but are likely to escape cancellation.
However, the market is not without its risks. Oilfield service majors rely upon on sub-contractors and equipment providers, which increases the risk of deadlines and budgets being adversely affected. This dependency can force companies to compensate NOCs in cases of financial losses and time delays. Oilfield service companies may also potentially face increased financial risks associated with long-term, fixed-price contracts with national oil companies (NOCs). These contracts allow oilfield service companies to provide integrated project management services, but invite additional risks associated with labor availability and productivity, cost over-runs, supplier and contractor pricing and performance, operating cost inflation, and potential claims for liquidated damages.
According to GBI Research, the value of the global oilfield services market amounted to about $142 billion in 2008. Due to the global economic slowdown, negative market growth shrank overall market size, reducing its value to about $138.6 billion in 2010. However, with increased E&P activity and increased demand for oilfield services, the global market for oilfield services is expected to increase in the future, reaching approximately $200 billion by the end of 2016.
* Oilfield Services Industry to 2016 – Technological Advancements, Unconventional Plays, and Deepwater Activity to Drive the Market
This study provides an in-depth analysis of the global oilfield services market and highlights various concerns, key trends and challenges, along with major companies involved in the industry. The report provides forecasts for the oilfield services industry to 2016, and also provides oilfield services industry forecasts worldwide by individual sub-segment type. The report gives an in-depth analysis for every sub-segment and provides market share analysis of the top oilfield services companies for each segment.
The report is built using data and information sourced from proprietary databases, primary and secondary research, and in-house analysis by GBI Research’s team of industry experts.