Rising demand for cost-effective communication solutions, surging collaborative efforts from various departments in oil and gas industries, rapid expansion of LTE and 4G networks, and technological advancement of microwave communication networks drive the market growth. Furthermore, rapid adoption of fiber optic solutions for short-distance communication, coupled with the integration of Industry 4.0, provides an impetus to the market growth. However, the dependence of cloud adoption increases the risk of data breaching cases, further hindering the market growth.
The oilfield communication solution market was valued at USD 3,020 million in 2019 and is expected to grow with a CAGR of 8.9% during the forecast period, 2020–2029.
In 2019, the oil and gas discoveries witnessed a significant surge on account of the increasing oil prices and advent of new technologies that helped in reducing the average project time of the oil and gas industries. As per the Journal of Petroleum Technology, there is a 30% rise in the oil and gas discovered resources from compared to 2018. The global discoveries produced 3.2 billion barrels of oil equivalent (BOE) in the first quarter, of which 2.2 billion BOE was yielded in February. The U.S. accounted for 38% of the total volumes of oil and gas from Glaucus-1 natural gas discovery of Cyprus and Tilapia and Haimara oil and gas discoveries of Guyana, South Africa.
Considering the pandemic, there is minimal impact on the adoption of the communication solution market. The oilfields are already established and considering the use of network communication, where the field personnel resolves the queries virtually via video conferencing. Additionally, the requirement of hardware to establish communication impacts the market to some extent.
Microwave communication networks are widely used for off-shore to land and off-shore to off-shore connectivity. They are cost-effective compared to the optical fiber communication network, and remarkably surpasses the capacity and latency capabilities of traditional satellite communications (VSAT). The microwave communication network acts as an alternative to the fiber-optic communication network and VSAT communication on account of the higher cost of fiber-optics communication. Increasing advancement in the integrated operations (IO) drives the market growth; in 2016, Oil and Natural Gas Corporation Limited (ONGC) located in India, deployed by the Ceragon microwave communication network to ensure secure, reliable, and high-capacity communication.
The solution segment comprises software tools and platform that helps to receive data and manage complex data requirements and field operations. The solution segment held the largest share in the market in 2019. On the other hand, the services segment is expected to grow with the highest CAGR during the forecast period.
The M2M communication software segment is projected to exhibit the fastest growth during the forecast period as it allows quick exchange of information without any data loss. Furthermore, M2M communication software offers secure gateway devices, remote accessibility, low latency, and rugged hardened devices, among others. Growing competitiveness among industry verticals for sharing accurate data to the consumers drives the segment growth. In 2016, Ecopetrol, the foremost and largest natural gas company in South America, deployed Billion Electric Co. Ltd., an M2M communication solution to provide reliable and robust internet connectivity for the gas sector in harsh terrains with inadequate network coverage to facilitate time-critical decisions in real-time.
The on-shore segment holds the largest market share; on the other hand, the off-shore segment is expected to grow with the highest CAGR during the forecast period. Surging demand for energy, rapid advancements in technology for the elimination of legacy communication, and increasing concern regarding the security and safety of on-shore professionals drive the market growth. For instance, in 2019, Saipem, a leading company in engineering, drilling, and construction of primary projects in the energy and infrastructure sectors, received on-shore projects worth approximately USD 3.5 billion from the Arabian Oil Company.
The VSAT communication segment holds more than 28% shares in the oilfield communication market on account of its ability to withstand harsh environmental conditions and offers broader coverage areas. Furthermore, it provides cost-effective, high network performance, flexibility, and large data broadcast capabilities.
The segment is further classified into portable and fixed VSAT communication networks. The fixed VSAT provides an uninterrupted connection that enables multiplex voice and data and even video together over the same line with faster speed. Apart from this, increasing demand to improve remote and autonomous operations of off-shore and on-shore sites bolsters the market growth. For instance, in 2019, Speedcast International Limited signed a contract with a notable Norwegian shipowner to increase VSAT connectivity.
North America held the largest market share in 2019 and is expected to dominate the market during the forecast period on account of the rising number of oil wells and rig count in the region. The presence of giant tech companies offering oilfield communication solution software, such as includes CommScope, Baker Hughes, Ceragon Network Ltd, RigNet, and Hughes Network Systems, among others, provides an impetus to the market growth.
Furthermore, regional exploration and production activities are shifting from civilized to remote environment on account of rising energy demand. As a result, oil and gas companies have been forced to change the way they communicate. This enables the oil and gas industry to adopt cutting-edge and emerging technologies and robust pipeline networks, distribution channels, refineries, and exploration facilities.
The Middle East and Africa is projected to exhibit the fastest growth in the oilfield communication solution software as the region is backed by the presence of large-scale operations of oil and gas companies due to large oil reservoirs in the region. This enables oil and gas companies to invest heavily in digitizing on-shore and off-shore field operations to ensure profitability and cost-effective production by continuous monitoring, efficient work management, and leveraging high-quality communication solution software. For instance, in 2018, OPP, the Oman oil gas company, deployed Tait Communication Wireless Solution to ensure reliable communications for the field operation, maintenance, safety, and security needs with the ability for future expansion.