Presence of energy guzzlers, China, India, Japan, and South Korea has driven growth of regional pipeline market in the recent past
LONDON- The global crude oil pipelines market is projected to experience a significantly tepid growth rate throughout the forecast period, registering a CAGR of only 0.3 per cent, according to Technavio’s latest report.
The report covers and analyzes the global crude oil pipeline market involved in the collection and transportation of crude oil from production sites in upstream fields to refining facilities worldwide.
“The market is expected to be driven by factors such as the shift in the exploration base of crude oil supplies and increasing collaboration between various nations. These key drivers of the market are projected to be in line with the ongoing trend of securing unconventional reserve assets in the oil and gas industry,” says Thanikachalam Chandrasekaran, a lead oil and gas research expert from Technavio.
In 2015, with a market share of over 58 per cent, Americas dominated the global crude oil pipelines market, followed by EMEA with around 29 per cent and the APAC with approximately 13 per cent.
Americas: largest length of crude oil pipeline in the world
The Americas is the world’s second-largest consumer of crude oil owing to constant demand from the US, Canada, and Mexico.
The US has been a leader in oil and gas exploits since the inception of the oil and gas industry. No other region can boast of the level of development in the oil and gas pipeline network, as seen in the US.
Practically, the total length of crude oil pipelines in the Americas is more than the other two regions combined. This gives us a concrete idea about how mature the crude oil pipeline market is in the region.
However, contrary to the inherent characteristic of slow growth in any mature market, the market in the Americas is still expanding.
Weighed down by the collapse of the upstream sector and lackluster demand figures, the crude oil pipeline market in the region is expected to expand at a CAGR of only 0.3% during the forecast period.
EMEA: abundant reserves of crude oil in the Middle East
EMEA has been a global hotspot for crude and natural gas production since the discovery of oil in the region in the 1950s. The region consists of countries such as Saudi Arabia, Iran, the UAE, and Kuwait.
These nations have been at the forefront of oil production volumes for decades now. The major factor driving the growth of the crude oil pipeline network in the region is the monetization of abundant reserves available in the Middle East and their transportation within EMEA or outside.
However, the crude oil pipeline market is not expected to see any significant growth in the forecast period owing to the over-dependence of regional consumers on natural gas.
With this fact in hindsight, EMEA is expected to see the slowest rate of expansion in the crude oil pipeline market and the lowest CAGR amounting to 0.1 per cent.
APAC: immense growth potential for crude oil pipeline
For the most part of the last century, APAC had been on the back foot in terms of activities related to energy resources.
These low exploit levels were in tandem with the low levels of economic activities in the region. However, since the 1980s new economic powerhouses came up in the region, resulting in sudden increase in demand.
As a result, APAC had to rely on imports either through pipelines or marine vessels. The presence of energy guzzlers like China, India, Japan, and South Korea has driven the growth of the regional pipeline market in the recent past.
The demand, primarily from these countries, is expected to keep the crude oil pipeline market in the region chugging along.
The total length of the crude oil pipelines in the region was 64.62 thousand miles in 2015 and is expected to reach 67.28 thousand miles in 2020 at a CAGR of 0.8 per cent.
“The low cumulative growth rate indicated for the forecast period in APAC does not justify the immense growth potential that this region encapsulates. With the rising parity of the growing economics like India and China in the tow, the region is expected to see a significant rise in pipeline construction activities in the future,” says Thanikachalam.