EPC stands for Engineering, Procurement, Construction and is a prominent form of contracting agreement in the construction industry. Companies that deliver EPC Projects are commonly referred to as EPC Contractors. These services are adopted by various sectors such as oil & gas companies. These services are used across long-term projects, which require skilled laborers. Increasing demand for oil & gas globally is augmenting exploration activities and likely to create the need for advanced EPC systems. Thus, on the back of the current EPC system's efficiency, the oil & gas EPC market is witnessing high growth. The majority of the companies provide end-to-end EPC services. Large scale companies offer end-to-end services, whereas medium scale companies provide one or two components of EPC.
Increasing demand for oil & gas globally.
Increasing demand and interest for oil & gas globally is expanding exploration activities and likely to generate the necessity for advanced EPC systems.
Thus, on the back of the current EPC system's efficiency, the oil & gas EPC market is witnessing high growth.
The National Petroleum Council (NPC) in the United States predicted a 50–60% growth in total global energy demand by 2030.
The global demand for natural gas is expected to increase by 1.6% between 2016 and 2022, with additional consumption of 370 billion cubic meters by 2022, up from 3630 cm in 2016.
According to the International Energy Association, in 2019, offshore oil's daily production is expected to increase from 26.4 thousand barrels of oil equivalent per day to 27.4 thousand barrels of oil equivalent per day is expected to generate demand for the oil and gas EPC market during the forecast period.
Global oil production is increasing worldwide due to the huge demand from end-users which acts as a market growth for the sand control systems market.
Saudi Arabia owns around 18 % of the global proven petroleum reserves and ranks as the largest petroleum exporter.
In 2018, the top three crude oil-producing countries were the United States (10.96mb/d), Russia (10.53mb/d) and Saudi Arabia (10.32mb/d).
The United States will lead to oil-supply growth over the next six years, thanks to the incredible strength of its shale industry, triggering a rapid transformation of global oil markets.
By 2024, the United States will export more oil than Russia and will close in on Saudi Arabia – a pivotal milestone that will bring a greater diversity of supply to markets
In 2018, Global oil production rose by 2.2 million b/d. This surge mainly accounts for an increase in U.S oil production by 2.2 million b/d, which is a record for any country in any year.
Elsewhere, production in Canada, Saudi Arabia has grown by 410,000 b/d, 390,000 b/d. While countries such as Venezuela, Iran has registered negative production declined by -580,000 b/d, 310,000 b/d, respectively.
According to the U.S EIA, Saudi Arabia is the second major oil-producing nation, with an average production of 12.42 million barrels per day, accounting for 12% of global oil production.
The South American market for Oil and Gas EPC was valued at USD 5.76 billion in 2018. The market is estimated to grow at a CAGR of 5.88% during the forecast period to reach a market value of USD 9.04 billion by 2026.
South America has been a prolific source of oil and gas supplies to an industrializing world.
South America has an array of equally exciting unconventional resource plays (shale, deepwater etc.), which are set to start producing during the course of the next decade, strengthening the region’s position as a major global hydrocarbon hub.
E&P companies will invest an average Capex of $12.7bn per year on oil and gas fields across South America between 2018 and 2025.
Abreu e Lima Refinery (RNEST), worth $21 bn, is the major new downstream project in Brazil. The refinery is being planned to have a processing capacity of 230,000 barrels per day. The plant will feature two refining trains with a capacity of 115,000 b/d each.
Brazil will benefit from the lion’s share of this investment. Other South American nations are also likely to see considerable E&P activity, including Argentina with its enormous shale formations, whilst Venezuela is still home to massive crude oil reserves.
Therefore, the E & E&P companies' huge investment in South American nations acts as a major opportunity for the growth of South America's market.
There is a decent no of EPC companies having their presence in South America. For instance, SANTOSCMI (SCMI) is a construction service company established in 18 countries that includes major South American economies like Argentina, Brazil, Chile, Colombia, Peru, Uruguay, Venezuela and others.
The company has full EPC (Engineering, Procurement, Construction and Commissioning) capabilities to design and build thermoelectric power plants, oil & gas production, processing, storage and distribution facilities in Latin America and the Caribbean.
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