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Oil & Gas Market Report : Mid-2020 Global Outlook

The flow of information toward the Oil and Gas market has been quite dense on the last few months, to the extend where it becomes difficult to appreciate the market shape.

If so many tend to read these news pessimistically, we decided to investigate the reality of data and crunch our numbers from www.projectsmartexplorer.com to make an inventory halfway through the year.

Where do we stand 6 months in 2020?

Beginning with two strong months, 2020 was, as we forecasted, running for a record year. Yet the premises of Covid-19 pandemic spreading around the world put the dynamic on hold.

While some countries started to implement quarantine measures, the Oil & Gas and Petrochemical demand dived and so did some investments.

In early April, large and well-known projects made the headlines as being postponed or cancelled, the same names were running around in all medias, nevertheless most of these projects had previously a questionable profitability and we can already see some of them back on the market for retender.

In May and June, you could notice that projects announced to be postponed or cancelled nearly disappeared, instead, this wave of bad news has been taken over by an opposite wave of opportunist operators to invest in counter-cycle in expecting lower prices from the contractors with projects originally planned in 2021 or 2022 but coming suddenly for 2020 sanction.

In fact, most of the projects experience delays due to company struggle of organization, some others get postponed to next year, but extremely rare projects got cancelled.

Meaning business stood robust during the pandemic.

Extract for Project Smart Explorer: Projects already awarded at the end of June 2020

If we look the business pipeline of Business Opportunities in kUSD for EPC contract awarded at the end of June for Centrifugal pumps, as a good indicator of the activity, numbers are already above half of the previous year.

These good results are for one part due to projects awarded in 2019 for the year 2020. For the other, projects awarded since mid-March taking advantage of lower market prices.

As a matter of fact, some operators have moved forward projects to benefit from Engineering companies discounted prices on the market, reviving the market alongside with projects already in the pipe.

What’s next for the end of 2020

This Covid and barrel price war crisis is creating several challenges for the energy industry as well as many opportunities. New markets are opening with the decarbonization (Carbon Capture, Utilization and Storage, Electrification, Hydrogen) as well as the new digital technologies to cut Operational Expenditures.

As we are writing this post, the market resumes its activities with encouraging prospects. Projects are back on table and some countries have remembered the importance of the Oil & Gas sector.

Projects are back on table and some countries have remembered the importance
of the Oil & Gas sector.

For example, many countries emerge from quarantine with the ambition to relocate their industry or to build up their own manufacturing activities. Petrochemical being the first source of supply of these initiatives, we can observe an acceleration of downstream projects.

And as you can see below, this trend will continue for at least 5 years.

Polyethylene output growth over the next five years

On the same model, many developments are ramping up for Gas production to take part of tomorrow energy mix in parallel with renewable energies.  

Today trends on the market give us the forecast Capital Expenditures for 2020 should end-up at the same level or above compared with 2019. Previsions for 2021 are also high, fueled by projects postponed due to lack of Engineering capacities.

The main driver for this recovery is the demand for oil and gas being robust, now and for the next 10 years. Thus, projects need to happen, even with delays, to compensate depleting fields and match the increase of energy demand.

If you want to know where are these projects and maintain your business, one solution has already been chosen by +250 companies worldwide : www.projectsmartexplorer.com

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2 Comments to “Oil & Gas Market Report : Mid-2020 Global Outlook”

  1. Très bien dit, je serai un tout petit moins optimiste sur la vitesse de la reprise.
    Beaucoup de revue des projets par les grands opérateurs pour en réduire les coûts pour leurs études économiques. On a déjà vécu cela de nombreuses fois.
    Mais chez les moins grands ou moins structurés, beaucoup de crainte pour le prix du baril ou du gaz et ils tardent un peu à décider de la suite.
    Si vous voulez que je vous offre un peu de pub dans ma prochaine revue, un petit texte, un lien, une phrase que je pourrais avoir écrite moi même pour apprécier votre système
    Bien amicalement aux montagnards sous les orages
    Orléans sous le soleil
    JJ et Sylvie ROYANT

    • Bonjour Jean Jacques,
      Merci pour ton analyse et ton retour d’expérience.
      Si tu as l’occasion n’hésites à partager la news à ceux que ça pourrait aider.

      Profitez bien du soleil d’Orléans.
      Amicalement, les Guilhem

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