World Oilfield Equipment Demand to Reach $85 Billion in 2012

The world oilfield equipment market is projected to increase 2.9 percent per year through 2012 to $85 billion.  This will represent a drastic deceleration from the 2002-2007 pace, when persistently high global oil and gas prices and rapid economic development in China and India combined to create an environment conducive to worldwide oil and gas drilling and production activity.  In the short term, the global economic slowdown and major reduction in crude oil prices as of late 2008 will most likely reduce oil and gas equipment sales for much of 2009.  However, after that, growth is expected to accelerate, as heavily populated China and India continue to recover. These and other trends, including market share and product segmentation, are presented in World Oilfield Equipment, a new study from The Freedonia Group, Inc., a Cleveland-based industry research firm.

The most rapid growth in oilfield equipment demand through 2012 will occur in a few countries in the developing world where oil and/or gas production is expected to rise strongly, especially Brazil, China and Kazakhstan.  Offshore regions of western Africa such as Nigeria and Angola also hold strong growth prospects, assuming the political and economic environments in those areas remain relatively stable.  In China and Qatar, natural gas related drilling will grow especially fast.

In contrast, maturity and declining output of fields located in the US, Mexico, Venezuela, Norway, and the UK will work to suppress oilfield equipment markets in these countries, although there will be opportunities in repair/maintenance and enhanced oil recovery activities.  In Mexico and Venezuela, growth could become stronger if foreign technologically advanced energy companies are allowed greater rights to drilling and exploration activities, a domain that is currently monopolized by inefficient state-controlled entities in both countries. 

As drilling operations increase in complexity, the industry is becoming more reliant on high-technology services such as directional drilling control and logging- and measurement-while-drilling.  Despite the overall market exhibiting weak gains through 2012, prospects for certain products are more favorable, particularly for fixed-cutter drill bits and advanced well logging equipment.  The large tubular goods market will continue to benefit from increases in drilling efficiency, with gains in casing demand being bolstered by a trend toward greater footage drilled per rig.

The Freedonia Group is a leading international business research company, founded in 1985, that publishes more than 100 industry research studies annually. This industry analysis provides an unbiased outlook and a reliable assessment of an industry and includes product segmentation and demand forecasts, industry trends, demand history, threats and opportunities, competitive strategies, market share determinations and company profiles.