Oilfield Equipment Market

Market Overview

The global oilfield equipment market size was valued at USD 124.89 billion in 2022. It is estimated to reach USD 161.67 billion by 2031, growing at a CAGR of 2.9% during the forecast period (2023–2031).

Crude oil is the source of many of the fuels that people use on a daily basis. Oil is used in various things, including electric power plants, heating appliances, and automobiles. Skilled workers must harvest oil from underground areas in oil fields to obtain this important commodity. They accomplish this on a massive scale using large oilfield equipment. The oilfield equipment consists of a complete line of components and equipment utilized for the drilling and production of oil and gas.

The components of oilfield equipment include cables, drill bits, derrick, pipe, and others required to extract oil and gas from the Earth's surface. In addition, it includes heat exchangers, air coolers, tank vessels, fuel-gas conditioning, amine plants, hydrogen sulfide removal, and others. It is manufactured and designed to meet the application-specific requirements and service type.

Highlights

• Drilling equipment dominates the type segment
• On-shore dominates the application segment
• North America is the highest shareholder in the global market

Market Dynamics

Global OilField Equipment Market Drivers

Rising Exploration and Drilling Activities for Oil around the Globe

Due to advancements in drilling technology, an increase in the need for fuel for transportation, and other factors, oil exploration and drilling activities have advanced significantly over the past century. Also, the industry is developing due to the increasing success rate of petroleum extraction. Likewise, greater economic competitiveness in the oil exploration, drilling, and service sectors increases the use of oilfield equipment, increasing demand for oilfield equipment.

In order to obtain a competitive advantage over their rivals and meet the rising demand for oil around the world, several governments and oil firms are concentrating on new exploration and drilling activities for oil and gas. For instance, a Chinese oil and gas corporation named PetroChina announced in November 2018 that it planned to increase oil production in the northwest Xinjiang area by 2021. A recently discovered oilfield is the location. Moreover, Sinopec and PetroChina, two of the leading oil firms in China, have joined forces to explore and produce crude oil in China's western areas to boost domestic output. Thus, the factors above fuel the market expansion.

Redevelopment of Mature Oil Wells

The mature fields are a field in which oil production is declining. These fields had reached the end of their productive life. Though new developments and discoveries often take the limelight, these fields are considered the "backbone" of the industry. The mature fields are also called brownfields. Moreover, more than 60% of the daily oil production globally originates from mature fields.

Furthermore, the development of mature oil fields has been increasingly attractive due to advanced oil wells and reservoir engineering technology. Therefore, many companies are focusing on new strategies for redeveloping oil fields due to profitability considerations and maintaining their oil production volumes. For instance, in May 2019, KBR, Inc., a U.S.-based engineering and construction company, signed an agreement with Cepsa, a Spanish oil and gas firm, and Sonatrach, an Algerian government-owned company, to redevelopment oil fields located in the Hassi Messaoud, Algeria. Such factors drive market expansion.

Global OilField Equipment Market Restraints

Fluctuations in Foreign Currencies Continue its Influence Over Profit Margins

The global economic slowdown, as well as soaring house prices in developed economies, had a profound influence on the market in the last decade. As a result, the market is still recovering from the recession and stabilizing inflation rates in developed economies. However, the constant fluctuations in foreign currency exchange continue to hinder the profit margin for market players. Further, the extraction of metal used for manufacturing oilfield equipment is also influenced by global economic conditions, hindering market growth in coming years. The fast-growing economies driving the rapid industrialization and development of the oil and gas industry are anticipated to offset these price factors and provide stable profit margins for the market players in the coming years.

Global OilField Equipment Market Opportunities

Technological Developments in Oilfield Equipment

Oil and gas production can be increased through emerging technology. The advancement in technology in oilfield equipment offers benefits such as increasing safety, reduction in costs, increase in speed of the processes, and increase in efficiency. Advanced technologies like Artificial Intelligence, IoT, and analytics help digitize oil and gas refineries, pipelines, exploration sites, and infrastructure. This element allows the oil and gas businesses to gather all the data on a single platform.

Furthermore, there is an increase in investment in emerging technologies in oil and gas companies to increase productivity and reduce risks and costs. For instance, in September 2019, Imperial and Alberta Machine Intelligence Institute (Amii) collaborated to develop machine learning capabilities and artificial intelligence (AI) for the oil & gas industry to improve the safety of its workforce and reduce environmental impacts. Similarly, in December 2019, Dataiku Technology and Schlumberger partnered to develop and deploy artificial intelligence solutions across oil and gas operations. Such factors create opportunities for market growth.

Regional Analysis

North America Dominates the Global Market

Based on region, the global oilfield equipment market is bifurcated into North America, Europe, Asia-Pacific, and LAMEA. 

North America is the most significant global oilfield equipment market shareholder and is estimated to exhibit a CAGR of 3.61% during the forecast period. The increase in oil and gas sector investment with the discovery of new oil fields fuels the market growth. In addition, the key regions in North America are expected to create increasing demand for oilfield equipment as major oil and gas production and massive exploration of the same. Moreover, the number of petrochemical companies in prominent regions of North America is expected to boost the demand for oilfield equipment. Furthermore, increasing investments in North America's oil and gas industry offers lucrative growth opportunities for the market players. For instance, the Canadian Association of Petroleum Producers forecasted a 41% growth in the production of oil sands from 2019-2035.

Additionally, in September 2019, Shell, one of the major oil and gas companies, invested USD 13 billion in Canada's liquefied natural gas project. Similarly, in November 2018, major U.S. firms planned to invest USD 2.4 billion in the oil and gas industry of Equatorial Guinea. These firms are set to start drilling around 11 wells. Such developments drive regional market growth.

Asia-Pacific is estimated to exhibit a CAGR of 2.0% over the forecast period. The increased rate of oil exploration in nations like China and Australia is driving up demand for oilfield equipment. Developing the oil and gas sector in these nations is anticipated to accelerate market expansion. In addition, oilfield equipment manufacturers have heavily invested in R&D to develop cutting-edge technologies as a result of a decline in field production. For instance, KINETIC and WEFIC, both from Australia, worked together to open a service center in August 2017 to promote premium oilfield equipment there.

Furthermore, to acquire a competitive edge in the oil and gas industry, many developing nations in the Asia-Pacific region have focused on creating a comprehensive solution for crude oil. For instance, India utilized USD 118 billion on oil and gas exploration and the development of infrastructure for natural gas to meet its needs. China has also loosened limits on foreign investment in conventional oil and gas upstream to promote resource development.

In Europe, the market is growing due to the region's oil and gas industry expansion. The need for oilfield systems is anticipated to increase due to the rising trend of redeveloping mature fields, which will ultimately fuel market expansion. Increased crude field output in Europe can be attributed to discoveries of oil and gas reserves beneath the North Sea. In addition, the demand for crude oil has prompted oil production and exploration in Europe. In off-shore and on-shore settings, numerous businesses engage in substantial drilling operations. Furthermore, many big oil and gas exploration companies are growing their businesses through strategic partnership arrangements. According to estimates, these variables will present growth prospects for regional market participants. For instance, at the 22nd Saint Petersburg International Economic Conference in March 2019, PAO NOVATEK and TOTAL S.A. inked a contract to participate in the Arctic LNG 2 project.

The LAMEA region is studied across Latin America, the Middle East, and Africa. Oilfield equipment demand in LAMEA has been spurred by increased investment in the oil and gas sectors and the discovery of new oil reserves in Latin America. Due to ongoing oil and gas exploration in the Gulf of Mexico, which propels market expansion, important nations in the LAMEA area use oilfield equipment. Likewise, the Middle East's increased oil and gas exploration due to the industry's expansion will spur market expansion soon. For example, the Middle East and North Africa region has invested over USD 250 billion in petrochemicals and oil and gas projects.

Segmental Analysis

The global oilfield equipment market is segmented by type and application.

Based on type, the global oilfield equipment market is bifurcated into drilling equipment, field production machinery, pumps and valves, and others. 

The drilling equipment segment dominates the global market and is projected to exhibit a CAGR of 2.3% over the forecast period. The drilling equipment includes cables, drill bits, derrick, pipe, and others necessary to extract oil and gas from the Earth's surface. The drilling equipment is utilized for drilling holes to extract oil or natural gas and identify geologic reservoirs. Moreover, advancing oil drilling equipment and drilling processes drive market growth. For example, in June 2018, Diamond Off-shore Drilling, Inc. launched a blockchain drilling service in the offshore drilling industry to reduce the total cost of ownership of oil and gas operators. Similarly, the discovery of new oil and gas fields across the globe offers lucrative growth opportunities for market participants throughout the forecast period. For instance, in October 2019, the National Iranian Oil Company (NIOC) discovered a new gas field in southern Iran; the gas field is estimated to have more than 15 trillion cubic feet of natural gas.

The pumps such as centrifugal pumps, reciprocating plunger pumps, progressive cavity pumps, gear pumps, diaphragm pumps, and metering pumps are installed to transfer fluid in the oil and gas industry. In addition, the oil and gas industry valves include ARV or ARC valves, ball valves, bellow sealed valves, breather valves, butterfly valves, and gate valves. The gate valve opens by lifting a gate out of the path of the fluid. They are widely used to isolate regions of the chamber in ultra-high vacuum chambers. Moreover, a wide range of pumps is required to transfer crude oil to a pipeline from a storage tank for re-purification. In addition, these components are utilized to control flow rates by reducing the respective pressure, protecting equipment, and guiding the oil refining process. The primary factors fueling market growth are the new heavy investments in oil and gas exploration activities and refineries and pipelines in the Middle East and Africa, the Americas, and Asia.

Based on application, the global oilfield equipment market is segmented into on-shore and off-shore. 

The on-shore segment owns the highest market share and is estimated to exhibit a CAGR of 3.3% during the forecast period. On-shore refers to the exploration and production of oil and gas on the mainland. 70% of the world's oil production is produced there. The equipment and buildings are constructed directly on the Earth for drilling and exploring. The market for on-shore oilfield equipment is benefiting from the discovery of new oil and gas resources. In order to meet the increased demand, oil and gas corporations are also concentrating on finding new oil and gas resources. The machinery used in oilfields is essential for drilling for both oil and gas. As a result, they are set up at the gas or oil drilling hole. Oilfield equipment is frequently used in on-shore applications for pressure sealing the whole casing utilized in the relevant activity. Likewise, the rising investments in offshore oil and gas exploration and production activities present profitable market expansion potential.

Oil and natural gas extraction from fields beneath the ocean's surface is called "off-shore." Due to the expansion of undersea drilling for oil and gas exploration, oilfield equipment off-shore has expanded. Production and exploration in off-shore subsea areas are expanding due to the stabilization and recovery of crude oil prices. The market is expanding because of the increasing reliance on components for pressure pumping systems. The need for oilfield equipment is also fueled by the upkeep and repair of machinery and increased industrial spending. Similarly, the oilfield equipment business is anticipated to grow in the next years due to the oil and gas industry boom and strict laws and regulations on using efficient solutions and components.

Recent Developments

• January 2023- According to company documents and persons familiar with its operations, following Moscow's invasion of Ukraine, the world's largest oilfield firm SLB (SLB.N), increased its business in Russia by cherry-picking service and equipment contracts from departing competitors.
• October 2022- Inclusive Energy Ltd., a global leader in the oil and gas equipment services market, revealed the recent formation of numerous high-impact strategic partnerships, including the closing of milestone financings with several significant Canadian oil and gas producers. The partnerships with these companies represent additional underwritings for Inclusive in the upstream market and further validation of Inclusive's successful investment platform.