This report includes key market dynamics affecting the demand for oil and gas static and rotating equipment globally. As a part of our market dynamics analysis, we have analyzed the market drivers, market restraints, and market opportunities.
Albany, NY -- (SBWIRE) -- 01/20/2016 -- Static and rotating equipment form an essential part of the oil and gas infrastructure. Upstream, midstream, and downstream activities depend on the reliability and quality of these equipment. However, on account of the recent drop in oil prices, expenditure on E&P activities is expected to reduce in the near future, which is likely to have an adverse impact on demand for these equipment. New technologies such as oil production from unconventional sources are expected to be major demand drivers for these equipment in the future. The U.S. market has already benefited majorly from the shale gas boom and other economies, such as China and Argentina, are expected to follow suit. Strong development of LNG infrastructure coupled with aggressive investments in the refining sector expected in the Middle East and Asia Pacific would be critical demand drivers for static and rotating equipment. The static and rotating equipment market is expected to grow at a CAGR of 3.7% from 2014 to 2022.
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Both static and rotating equipment have been sub-segment on the basis of certain critical products that are widely deployed in the oil and gas industry. Oil and gas static equipment comprise valves, boilers, furnaces, and heat exchangers. Oil and gas rotating equipment comprise turbines, pumps, and compressors. The investment in such equipment is directly dependent upon the planned capital expenditure and E&P budget of major oil and gas companies, as well as on country-specific outlooks for the hydrocarbons industry. Countries such as the U.S., Canada, and China, and GCC countries have developed their domestic hydrocarbons sector and are major demand centers for such equipment.
The global market for static and rotating equipment stood at USD 26,558.63 million in 2013, and is anticipated to grow at a CAGR of 3.7% from 2014 to 2022, reaching USD 35,868 million by 2022. Both static and rotating equipment are manufactured by various OEMs across the world, who supply the same either directly to E&P companies or through EPC contractors. Sluggish demand and a hostile macroeconomic outlook have decreased the demand considerably, which has translated to pricing pressures for manufacturers. Numerous manufacturers are trying to differentiate their products through brand identification strategies and building up on product quality. Manufacturers are also focusing on reining in costs through numerous lean management strategies and other cost-cutting measures. Cutbacks in E&P expenditure are expected in the near future as oil and gas operators struggle to maintain margins in the current price regime. The upstream sector is expected to be the most affected by these macroeconomic developments. However, the midstream sector is expected to witness strong investments within the forecast period as natural gas continues to play an increasingly vital role in the global energy mix.
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North America was the largest market for static and rotating equipment globally in 2013 and is expected to retain its position as the market leader throughout the forecast period. North America's growth would be cemented by new oil sands projects in Canada, re-opening of offshore E&P activities in the Gulf of Mexico, privatization of Mexico's hydrocarbons sector, and a continued focus towards drilling more shale wells and developing the LNG industry. Sluggish growth can however be observed in Europe as operators struggle to maintain margins in the high cost upstream industry and more refineries are mothballed. The refining industry is expected to contribute considerably to this increase in equipment demand with most of the demand coming from the Middle East, wherein large refining complexes are currently under construction. Asia Pacific is expected to invest in developing its downstream sector further while upgrades can be observed in Russian refineries, as numerous old complexes have shutdown. North American refiners are also likely to maintain a bullish outlook for the refining sector driven by low feedstock prices. The global midstream sector would also witness significant growth within the forecast period with Australia expected to emerge as one of the largest LNG exporters globally in the near future. North American companies are also focusing on the LNG market and are expected to invest in large liquefaction capacity additions in an attempt to increase natural gas exports to Asia Pacific.
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