Oil & Gas and Petrochemicals Market is Doubling
As key indicator we picked up the Electrical Cables as one of the most representative product of the Oil & Gas and Petrochemical projects activity.
Pictures below are extracted from the www.projectsmartexplorer.com Oil & Gas and Petrochemical projects data base.
The first one shows, as an example, the volume of Electrical Cables Business Opportunities in K$ year per year related to engineering, procurement and construction (EPC) contracts awarded at the begining of July 2019.
Since these numbers are related to awarded EPC contracts, they are are actual numbers, not forecast.
The comparison between 2019 with the previous period 2015 to 2018, shows how in only the first 6-month of this year the volume of business opportunities to be sanctioned to manufacturers for Electrical Cables is already exceeding the previous years on a 12-month period.
New Business Model: Not-Tendered EPC Contracts
This picture, also reveals that a significant amount of business opportunities for Electrical Cables are already decided to be awarded in 2020 up to 2023.
These business opportunities are related to projects where the EPC contractor is already awarded and waiting the operator to make the Final Investment Decision (FID).
It is important to notice that these EPC contracts awarded for the period 2020 to 2023 were not tendered, the operator converted the Front End Engineering and Design (FEED) contract into EPC contract directly.
The purpose of this business model is for operators to save time and money in a context where projects costs are now supplier driven.
The not-tendered EPC contracts represent approximately 30% of the market and require from the vendors to position themselves at FEED phase as they will not be called during the execution phase.
Market Sustainable Growth 2019 to 2023
Actual numbers for business opportunities in Electrical Cables related to awarded EPC contracts on first half 2019 is already exceeding the 12-month last year level.
This intermediate is giving credit to our forecast, already published in January this year, that 2019 should double 2018 as illustrated below for the Electrical Cables.
In addition, we can see that this leap should continue in 2020.
Considering the perspective we have on 2021 and 2022, already as high as 2018, we can anticipate that these years will join the levels of 2019 and 2020.
Therefore the current market growth should last at least four years.
National and Independent Companies Gear up
All the Oil & Gas and Petrochemical companies are not equal in this booming market.
The picture below is also extracted from www.projectsmartexplorer.com data base and it shows how the Oil & Gas and Petrochemical market for Electrical Cables, as per example, will be split in the next five years between the:
– International Oil Companies (IOCs) in blue
– National Oil Companies (NOCs) in red
– Independent Companies (Independents) in green
From this picture we can see how the NOCs (52%) and the Independents (28%) represent 80% of the future market from 2019 to 2023.
In opposite way the IOCs are lagging far behind with only 21%.
Sine 2014, IOCs stand at 50% of their previous capital expenditure level while the NOCs and Independents run bullish in new projects upstream, midstream and downstream.
As a result the market is doubling, but at the initiative of hundreds of NOCs and Independents making money with smaller projects at lower risks and running on fast-track.
The market is doubling, and you ?