The market for artificial lift systems in India is expected to grow at a CAGR of over 2% during the forecast period of 2020 – 2025. Artificial lift is a method used to lower the producing bottom hole pressure (BHP) on the formation to obtain a higher production rate from the well. It supports oil & gas to move upward when the natural drive (primary recovery) is not enough to push the oil to the surface. As of 2018, mature fields account for more than 70% of the world’s oil and gas production. These mature fields need a pumping system, i.e., the artificial lift system. The need for enhanced recovery rates, a growing number of wells that require pressure support for extraction, increasing demand for energy & petrochemicals, and technological advancements that are enabling companies to economically extract oil from challenging areas are some of the factors driving the growth of artificial lifts system market. On the other hand, factors such as advancement in smart water flooding and various IOR technology are restraining the market growth during the forecast period.
- Electric submersible pumps (ESP) are expected to witness significant demand during the forecast period, owing to the availability of abundant resources, coupled with an increase in investments, which helps in driving the artificial lift systems market.
- Most of the new fields, as well as the older fields, require an artificial lift of some form for production. Hence, all the major companies are regularly adopting artificial lift in almost all wells. As the number of new exploration fields is increasing, these fields are expected to provide major opportunities for the artificial lift system market.
- Growing need to enhance production of oil & gas from maturing and matured fields are expected to drive the artificial lift systems market in India during the forecast period.
Key Market Trends
Electric Submersible Pumps (ESP) to Witness Significant Demand
- India is highly dependent on crude oil imports to fulfill its energy needs. According to the latest government data, the country’s dependence on crude oil imports reaches nearly 82% in 2019.
- The country has witnessed a decline in domestic production. ONGC, which is the major oil producer in the country, is witnessing decline due to technical issues in Mumbai and Neelam Heera fields and less than expected production in Santhal and Balol fields in Gujarat. The decline in production is also the result of aging fields which leads to a fall in the output. Such aging fields are expected to provide the potential to the usage of electric submersible pumps, thus driving the demand for artificial lift systems.
- During April 2000-December 2018, India attracted an FDI investment of about USD 7 billion in the petroleum and natural gas industry. Moreover, foreign investors have opportunities to invest in projects worth USD 300 billion in India, as the country looks to cut reliance on oil imports by 10% by 2022.
- The current usage of ESPs in India for oil and gas production is relatively low as compared to other artificial lift systems, However, the upcoming investments in the oil & gas sector are expected to provide opportunity to the electric submersible pumps market in the long run.
- Therefore, based on the above-mentioned factors, electric submersible pumps segment is expected to witness significant demand for artificial lift systems in India during the forecast period.
Increasing Maturing and Matured Fields to Drive the Market
- Mature and maturing oil & gas fields and a rising number of aging production technologies are expected to have a huge impact on the growth of the artificial lift market. Increasing competitiveness for the access of new reserves has put pressure on the maturing reserves for maximizing the output.
- However, the costs incurred for producing from such maturing reserves are not always profitable and have to be a strategic decision of the companies involved. The operational demands of the matured fields are always unique, and the approach needs to be tailored for specific fields.
- The opportunities presented by the matured and maturing fields are large enough to take a calculated risk and employ technically complex processes for enhancing production.
- The limited budgets available, combined with the ‘Lower for Longer’ oil prices throw open an opportunity for the companies in the oil production landscape to employ artificial lift and maintain the performance of the assets.
- The investments also include directional drilling, where there exists a significant opportunity for finding hydrocarbons. The current scenario of low oil price is the right opportunity for strategically segmenting the wells and related infrastructure, and employing various oilfield services, such as wireline logging, coiled tubing, and artificial lift, to enhance production from maturing assets.
- Hence, owing to the presence of matured and maturing fields, along with the number of fields are constantly increasing, artificial lift market is expected to play a quintessential role in the drilling markets.
The India artificial lift systems market is moderately fragmented. Some of the major players includes Schlumberger Ltd, Halliburton Company, Weatherford International plc, Baker Hughes Company, and Penguin Petroleum Services (P) Limited.
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