Oil&Gas and Petrochemical Market Outlook on Q3 2021 Stands Robust
As usual, we like to share our view on the market outlook on Q3 2021, especially in this lengthy Covid period. Our analysis relies on more than one thousands active projects we trace continuously in Oil & Gas, Petrochemical and Energy Transition.
As a first conclusion, the third quarter 2021 stands robust, and confirms trends detected on first half of the year.
The graph below illustrates the volume of capital expenditure of EPC contracts awarded on Q1, Q2 and Q3 2021.
This graph shows the volume of Capital Expenditure (Capex) related to Oil & Gas, Petrochemical and Energy Transition projects. Oil & Gas projects appear in Blue, Petrochemical in red and Energy Transition in green.
At the end of September 2021, the Capex awarded in EPC contracts exceeds in nine months the EPC contracts sanctioned last year in twelve months. These actual numbers let foreseeing a 5 to 10% increase at the end of 2021 compared with 2020.
Upstream investments are the major contributor in volume, while Energy Transition should double but at a much lower level. Then, the Downstream sector should remain stable.
Per region, we observe major discrepancies.
Asia-Pacific, North America and Middle-East concentrates 80% of the Investments
Not all the regions in the world evolve at the same speed. Asia-Pacific, North America and Middle-East concentrate more than 80% of the Capital Expenditures in projects.
The table above reports per region the number of projects sanctioned on the first nine months 2021 with the corresponding amount of capital expenditure.
From these figures, three regions emerged in the far lead, Asia-Pacific concentrates 32% of the investments, North America stands a step behind with 26% while Middle-East is following just behind at 23%.
By comparison, Africa, Europe and South America are lagging far behind with only 9%, 6% and 3% respectively. Anyway these three regions should should close the gap in the future as we see good perspectives for Oil & Gas in Africa and South America, while Europe should benefit from massive subsidized Energy Transition projects.
Snowball Effect between Hydrocarbons and Energy Transition Investments
As we can see on the google map below, Europe attracts quantities of projects. For now, these projects are still of small sizes as demonstrators and pilot projects in Energy Transition. But these tiny projects are strategic and will be deployed at larger scale in the future. They will be weighting more and more on market investments.
Despite the Covid crisis, the global demand for Oil & Gas rebounds to levels close to the end of 2019. Thus it boosts investments on the production side. These investments are themselves inflated by the new requirements to decarbonate fossil energies production and transformation.
In addition, we notice that the subsidized investments in Energy Transition contribute to increase the demand for Oil & Gas and their derivatives. Typically, it can be for energy or the production of sophisticated hydrocarbons products such as technologic plastics and fibers.
As a result, the capital expenditures in the hydrocarbon chain and in the Energy Transition start to generate a snowball effect. It illustrates how the ones at the origin of the carbon emissions, appear to be the ones at the source of the solutions.
For more detailed data about these market trends – key players, key countries, key applications – we suggest you to have a look into our interactive projects database www.projectsmartexplorer.com.
For more information, you can also have a look into our webinar below.
