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Healthy and Happy Year 2021

Oil & Gas and Petrochemical Resilient in 2020

Oil & Gas and Petrochemical Resilient in 2020

For last year greetings season, we had anticipated that 2020 should be chaotic, but surely not as it did happen. Anyway, the Oil & Gas and Petrochemical market has proven overall to be more resilient in 2020 than feared or perceived.

The Covid crisis, the barrel price war and the climate change constraints contributed to number of projects to be postponed.

But at the end of the year 2020, the volume of EPC contracts awarded gets very close in capital expenditure (CAPEX) to 2019 as shown in the barre graph below.

Oil & Gas and Petrochemical Resilient in 2020

The trend for 2021 is also very positive even though 20% or 30% of the forecasted projects on that year may see delay again.

Oil & Gas and Petrochemical Market: Reality versus Perception

How does it come that market reality is far different from market perception ?

During Spring 2020, we saw an avalanche of bad news with projects postponed and cancelled. The international oil companies (IOCs) rivaled of negative announcements reducing their investments and selling assets.

Despite all these communication efforts, these companies lost 50% of their value in the stock exchanges.

We can understand how much this historical drop could give a bad feeling about this sector.

Anyway, the volume of CAPEX awarded in EPC contracts in 2020 is at about the same level as 2019.

How is it possible ?

 The picture below compares the EPC contracts awarded between 2019 and 2020 depending on the profile of the operators. All these figures come from our projects database

Oil & Gas and Petrochemical Resilient in 2020
Oil & Gas and Petrochemical Resilient in 2020 compared to 2019

The international oil companies (IOCs) appear in Blue.

The national oil companies (NOCs) are represented in Red.

The independent companies (Independents) look Green.

In 2019, the operators awarded 242 projects representing $322 billion of CAPEX.

In 2020, they sanctioned 222 projects in EPC contracts for $297 billion of CAPEX.

The reality of the numbers shows how the overall market did not collapse in 2020 but declines by less than 10% only.

On that period, the IOCs came down by 50% in projects number and 60% in CAPEX feeding the perception of this historical drop.

New Players Lead the Market – Did you see Them?

If the IOCs lost more than 50% of the market, the NOCs and the Independents took a leap in 2020.

The NOCs increased CAPEX by 7% while the Independents jumped by 28%.

Together, the NOCs and Independents sanctioned about the same number of projects, 197 in 2019 and 199 in 2020. But the average size of these projects increased significantly from $1.1 billion CAPEX per project to $1.3 billion.

These figures confirm how much the market is shifting from the IOCs to the NOCs and Independents.

Did you see it and what about the future ?

Oil&Gas and Petrochemical Market Outlook for 2021 – 2025

For the coming years, we trace 1000 most active projects above $100 million CAPEX each from pre-FEED or FEED stage.

So, we have a pretty good view on the market for 2021 and 2022, but of course our visibility declines as we look at further years.

Oil & Gas and Petrochemical Resilient in 2020
Oil & Gas and Petrochemical Resilient in 2020 with perspective to 2021

Anyway, the comparison between 2020 and the perspectives for the period 2021 to 2025 confirms the previous trends.

On the coming years, the NOCs and the Independents will remain the dominant key players.

The Independents run projects usually smaller and on fast-track. That explains their apparent reduced share on the period 2021 to 2025.

But year per year, they will come up and feed the business pipeline.

Are you ready for it ?

In fact, sales organizations have easy to trace the projects from 10  IOCs, but running after about 400 NOCs and Independents is a different game.

This new context requires different tools and processes.

Guiding you on the your next opportunities :

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