The South America compressor market is expected to rise at a CAGR of approximately 2.9% during 2020 - 2025. Factor such as increasing demand for compressors from the fertilizers and petrochemical plants to process and pressurize multiple gases is likely going to drive the South America compressor market. However, increasing the installation of renewable energy sources to provide power, that does not use compressors areexpected to restrain the South America compressor market.
- Due to the extensive usage of compressors in upstream, midstream, and downstream sectors, the oil and gas industry is expected to be the largest segment for the South America compressors market during the forecast period.
- New technologies in compressors having more efficiency than the present ones are expected to create several opportunities for the South America compressor market in the future.
- Due to its highest gas production in the region, Argentina is expected to be the fastest-growing country in the South America compressor market. As of 2019, about 58.8% of the total electricity generated in the country is from gas energy.
Key Market Trends
Oil and Gas Industry Segment Expected to Dominate the Market
- Compressors are mechanical devices that increase the pressure of a gas by reducing its volume. They are widely used throughout the oil and gas industry. The upstream, midstream and downstream sectors of the oil and gas business require compression for numerous applications, such as transmission, storage, gas gathering, gas lift, gas injection, flash gas compression, and refrigeration.
- Moreover, discoveries of gas reservoirs in the region are likely going to use the compressor as an integral part of the gas transportation infrastructure. Hence, the expanding gas pipeline networks are expected to be one of the most significant drivers for the growth of the market studied during the forecast period.
- In 2019, out of the total electricity generated in South America, approximately 18.4% was from natural gas in the region. As the energy generation source, natural gas comes second after hydropower in the region, which in 2018 accounted for approximately 53.76% of the energy in the area.
- PetróleoBrasileiro S.A. (Petrobras) in 2019 has awarded MODEC to install the fifth Floating, Production, and Storage Offshore (FPSO) Unit in oil and gas Buzios field for its development. These development activities in the field are likely to drive the compressor market in the country.
- Libra oil field in Santos Basin in Brazil is an ultra-deep-water basin, is the largest oil field in Brazil, is under development phase, and is expected to complete by 2021. The oil and gas from the fields, when transferred to onshore, are likely to require compressors either through pipelines or through tankers.
- Hence, owing to the above points, the oil and gas industry segment is likely going to dominate the South America compressor market during the forecast period.
Argentina Expected to be the Fastest Growing Market
- Argentina, due to the constant increase in energy demand and an increasing number of commercial and industrial operations, the country is likely to be the fastest-growing market for the compressor in South America. Moreover, the growth in the share of natural gas in power generation in the country is likely to drive the compressor market.
- Furthermore, YPF, Argentina's state-run oil and gas producer, aims to increase hydrocarbon production by 5% per year, reaching 700,000 barrels of oil equivalent per day by 2022. The production of shale gas in the country increased by about 90% in 2019. This is expected to provide new avenues for the companies engaged in the compressor business.
- In 2019, the production of gas in Argentina was 41.6 billion cubic meters (bcm), which was higher than the production in 2018, 39.4 bcm. The increasing usage of gas in the country to generate electricity is likely to drive the compressor market in various sectors such as power generation, refineries, etc.
- GasoductodelNoreste (GNEA) is another major upcoming gas pipeline in Argentina. GNEA is a pipeline (1,500km long) that is being constructed to transport gas from Bolivia to different areas in Argentina. The government is also focusing on the development of the gas transportation infrastructure in the country, along with the development of this GNEA project.
- The country also has a huge potential for the fertilizer industry, as most of the fertilizers being used in the agricultural sector in the country are imported. The country imported around 2.63 million metric ton of fertilizer between January and October 2019, valued at over USD 760 million. This shows the huge potential for the fertilizer industry in the country. With the increase of domestic fertilizer manufacturing it is likely to increase the demand for compressors in the country.
- Equinor ASA in 2019 won five blocks in offshore Argentina for the exploration and production of oil and gas. The development of the blocks and the gas production from these blocks are likely to drive the compressor market in the country.
- Hence, owing to the above points, Argentina is expected to be the fastest-growing market for compressors in South America during the forecast period.
The South America compressor market is moderately fragmented. Some of the key players in this market include Atlas Copco AB, Siemens AG, Schulz S.A., Ebara Corporation, and Aerzener Maschinenfabrik GmbH.
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