Technavio analysts forecast the global subsea umbilicals, risers, and flow lines (SURF) marketto grow at a CAGR of almost 8% during the forecast period, according to their latest report. The research study covers the present scenario and growth prospects of the global SURFmarketfor 2017-2021.
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Technavio has published a new report on the global subsea umbilicals, risers, and flow lines market from 2017-2021. (Graphic: Business Wire)
Global SURF market at a glance
SURF act as a vital link between various operation centers in subsea drilling. They are designed to withstand high mechanical and chemical stresses and high operating temperatures and pressures to ensure the continuous and reliable supply of services in challenging environmental conditions below the sea. The global SURF market is highly dependent on the growth of the upstream oil and gas industry, which, in turn, is dependent on global crude oil prices. The rise in demand for oil and gas globally is expected to be the major driver for the market during the forecast period. The slump in crude oil prices has affected the upstream industry significantly while benefitting the downstream industry.
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Technavio analysts highlight the following three factors that are contributing to the growth of the global SURF market:
- Deepwater drilling turns economical
- Rising global oil and gas demand
- New exploration policies
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Deepwater drilling turns economical
The shale boom that led to a sharp decline in oil prices in mid-2014 made it difficult for companies operating in deepwater to extract oil feasibly. Since crude oil prices slipped below the $50/barrel mark, it became almost impossible for companies drilling in deepwater to break-even, since costs incurred in deep sea drilling were high. As a consequence, many oil and gas companies reduced their capex and many planned projects were shelved or deferred.
Gaurav Mohindru, a lead unit operations research analyst at Technavio, says, "Though the deepwater technology has been in existence for years, the process has become economically feasible only in recent times. The streamlining of operations by producers and prioritizing drilling in core wells resulted in reduced costs, which made producers capable of achieving breakeven at lower crude oil prices
Rising global oil and gas demand
Oil producers, especially OPEC countries, need to increase their production or venture into drilling new wells to meet the rising fuel demand. Most oil-producing countries do not have large additional capacities. Therefore, to meet the high fuel demand, oil companies will be required to explore and drill greenfield wells in new and existing oil fields.
"Natural gas has seen a higher rise in consumption than oil and the adoption of natural gas as a fuel is increasing. The continuous growth in the demand for oil and natural gas is expected to drive onshore and offshore exploration activities, in turn driving the growth of the global SURF market," adds Amit.
New exploration policies
In a move to attract companies to explore oil and gas fields, countries, such as India, Brazil, and Israel, have made noteworthy changes to their existing oil and gas exploration policies. To encourage the influx of investments in the oil and gas industry, the federal government of Brazil announced a change in its policies. The existing Brazil policy requires a number of goods and services produced in the country to be hired or contracted.
Numerous changes have been made to existing policies. A single license for conventional and unconventional hydrocarbon exploration, decrease in royalty values, and change in fiscal regime to revenue sharing contracts are a few of the major changes. HELP is still in the formulation stage and is expected to be rolled out shortly. These policy changes are anticipated to attract new investments from global players and drive the global SURF market.
Top vendors:
- Aker Solutions
- Prysmian Group
- Schlumberger (OneSubsea)
- TechnipFMC
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