The Middle-East oil country tubular goods (OCTG) market is expected to register approximately at a CAGR of more than 4.2% during the forecast period. Factors, such as the reducing supply-demand gap, the low oil breakeven prices due to the technological advancement and reduced oil services cost, and increased directional drilling are expected to drive the market. Moreover, oil country tubular goods are likely to be promulgated due to the recovery of crude oil prices and strategic initiatives taken by the companies operating in the upstream sector to augment the E&P activities. However, factors, such as sanctions on several countries in the region, along with geopolitical tension are expected to hinder the growth of the market studied.
- The premium-grade OCTG products are likely to witness higher growth rate on account of increasing focus on gas wells, horizontal wells, high pressure (above 5,000 psi) and high temperature (above 250 F) wells. The requirement of premium-grade OCTG products is higher in harsher and challenging upstream operation which is prevalent in the Middle-East region.
- Liberalization of oil and gas industry by major countries in Middle-East to increase the foreign investment and thereby helping the oil and gas industry to grow is likely to provide a opportunity for the OCTG market in the region.
- Saudi Arabia is one of the major oil producers globally, and the country stood second in production of crude oil in 2019. The economy of Saudi Arabia is highly dependent on oil & gas upstream sector, and the oil exports account for 40% of country’s GDP. Hence, Saudi Arabia is expected to be the largest market in the region for OCTG.
Key Market Trends
Premium-grade OCTG to Witness a Significant Growth
- The premium-grade OCTG market is in the growing phase on account of increasing demand from upstream activities. The premium-grade applications are widespread in gas wells and high pressure and temperature wells.
- The exploration of natural gas is receiving huge impetus with a surge in the development of shale reserves. Moreover, horizontal directional drilling has promulgated the production of natural gas from shale reserves, which, in turn, is a big boost for the premium-grade OCTG market in the Middle-East.
- The United Arab Emirates has a huge offshore industry for oil and gas, with a production of 1.1 million barrels per day, accounting for 42% of its total production in 2018. The number of offshore wells drilled in the country are increasing steadily, in turn, driving the premium grade OCTG market in the region.
- Moreover, countries, such as Iran, Iraq, and Egypt, have huge reserves of crude oil and natural gas. With the recovery of crude oil prices, the upstream activities in the region are expected to witness growth during the forecast period, which is further expected to increase demand for premium-grade OCTG.
Saudi Arabia to Drive the Market Demand
- Saudi Aramco, the national company of Saudi Arabia, plans to invest USD 334 billion across the oil and gas value chain by 2025, with major contributions in Saudi Arabia. The country is focusing majorly on the exploration of new fields and the expansion of existing oil and gas fields.
- In Saudi Arabia, the focus of exploration has increasingly shifted toward the offshore Red Sea and onshore unconventional. The number of offshore wells drilled in the country has increased, which has further increased the demand for OCTG in the region.
- In 2019, exploration drilling in Saudi Arabia yielded two significant discoveries, including al-Haryd and Shaur, a shallow-water gas finds. Thus, there is huge potential for offshore drilling services in the country, owing to the increase in the number of discovered offshore fields.
- Moreover, over the years, the country has been taking initiatives to increase its upstream oil & gas capabilities, especially with regard to drilling equipment and services. Hence, the market for OCTG is expected to increase during the forecast period.
The Middle-East oil country tubular goods (OCTG) market is moderately fragmented. Some of the key players are National-Oilwell Varco Inc., Nippon Steel Corporation, Tenaris SA, ArcelorMittal SA, and Vallourec SA.
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