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Oil and Gas EPC Market Size, Share, and Analysis, By Service Type (Engineering, Procurement, Fabrication, and Construction), By End User (Upstream, Midstream, and Downstream), By Application (Onshore and Offshore), By Region (North America, Europe, Asia-Pacific, and Rest of the World), And Regional Forecast 2024-2034
Oil and Gas EPC Market is projected to grow at a CAGR of 5.9% in the forecast period (2024-2034), with the market size valued at USD 50.2 billion in 2023 and expected to reach USD 94.8 billion by 2034.
Oil and Gas EPC, or engineering, procurement, and construction, is a comprehensive method to manage projects within the oil & gas sector, which includes project inception to completion. It consists of three key phases i.e., engineering, procurement, and construction. During the engineering phase, detailed designs for facilities and systems are developed, whereas procurement involves sourcing materials and services necessary for the project. Construction comprises the physical realization of the infrastructure according to the engineering designs. In addition, EPC contractors supervise the entire project, along with ensuring safety standards and monetary limitations. Besides, oil and gas EPC projects cover a broad spectrum, ranging from production facility creation to refineries and distribution networks. As a result, due to their complexity and capital-intensive nature, these projects demand expertise in engineering, project management, logistics, and risk management to achieve desired outcomes.
Oil and Gas EPC Market is anticipated to reach USD 94.8 billion, growing at a CAGR of 5.9% during the forecast period, owing to a notable rise in the energy demand, encouraging a search for efficient and affordable solutions. Innovations in technology, such as digitalization and artificial intelligence, are transforming the way projects are executed and mitigating operational risks. In addition, there's a high focus on sustainability, which further urges the adoption of cleaner technologies. However, the market encounters multiple challenges such as oil price volatility, geopolitical instabilities, and regulatory intricacies. Despite these challenges, the oil and gas EPC market is forecasted for growth due to the changing dynamics within the industry and the pursuit of innovation and efficiency.
Source: Fatpos Global
Oil and Gas EPC Market has been segmented based on Services Type into Engineering, Procurement, Fabrication, and Construction. The engineering segment is leading the market as engineering sets the foundation for entire projects, such as conceptual design and risk assessments. These steps are important to define the scope of the project, along with technical specifications and potential challenges. Additionally, oil and gas projects involve advanced technology and several market restrictions, due to which, considerable knowledge is needed to build facilities that meet the criteria of demand, safety, and environment. Subsequently, procurement and fabrication have been the major market contributors as they help in securing the right materials at competitive prices and building necessary components according to engineering specifications.
Oil and Gas EPC Market, based on End User is categorized into upstream, midstream, and downstream. The upstream segment attracts larger investments in comparison to midstream and downstream projects, as it requires the development of infrastructure such as drilling rigs, offshore platforms, pipelines, and processing facilities. This has resulted in a wider range of EPC services being used. Moreover, the focus on discovering and developing new oil and gas reserves has also boosted the demand for EPC services in the upstream sector. On the contrary, the midstream and downstream segments are playing important roles. Although individual projects are smaller than Upstream, the sheer number of pipelines and storage facilities that are required for transit has created the demand for Midstream services.
Source: Fatpos Global
Rise in Hydrocarbon Demand to Accelerate Market Growth and Development
Increasing demand for hydrocarbons, which consist of both oil and natural gas, has been providing growth opportunities in the oil and gas market. High demand helps companies to invest in multiple projects to meet the needs of exploration and production activities within the upstream segment. This makes it compulsory for EPC services to adapt to infrastructural developments, which require EPC services in refinery or modernization projects. In addition, the demand for hydrocarbons may also increase different downstream activities, which results in the requirements for EPC services in refinery expansion or modernization projects and ensuring an adequate supply of refined crude oil into usable products such as gasoline, diesel, and petrochemicals.
Development in Natural Gas to Promote the Growth of Oil and Gas EPC Market
Growing preferences for natural gas as a cleaner alternative to traditional fossil fuels such as coal are driving infrastructural development and benefiting the oil and gas EPC market. The global trade of liquefied natural gas (LNG) is increasing and requires the construction of new LNG terminals for export and import, as well as pipelines for onshore and offshore transportation. These projects require EPC services for design, engineering, procurement, and construction. This growth helps building pipelines to connect production areas to different population centers, that require EPC services for design, construction, and installation.
Oil and Gas Prices to be the Major Concerns Obstructing the Market Growth
Volatile nature of oil and gas prices has been presenting market challenges for the oil and gas EPC market. Fluctuations in prices can create investment uncertainty, as various companies may be reluctant to invest in projects during times of low operations, which results in the decline of demand. Moreover, budgetary burdens also arise as companies struggle to forecast project budgets accurately, which potentially leads to mismanagement of funds. Besides, financial institutions are also becoming more risk-averse, which is making it difficult for EPC companies to secure project financing. Thus, to lessen these risks, EPC companies can focus on cost optimization through efficient project management practices and technology adoption.
Oil and Gas EPC market is segmented based on regional analysis into five major regions: North America, Latin America, Europe, Asia Pacific, and the Middle East and Africa. The Asia Pacific region has maintained rapid economic growth in countries such as China and India, due to the rise in energy demand, which attracts a high investment in oil and gas infrastructure. The region has been a key producer of oil and gas, with China being the largest producer, which has contributed to the strong growth of the EPC market. In addition, regional governments are spending extensively on oil and gas projects to address rising energy demand across the region.
North America has a historic and robust market with better downstream activity and a well-developed pipeline network. Meanwhile, strict government rules have shifted the market toward renewable energy in the North American region. Furthermore, Latin America has huge oil and gas deposits, thus expecting to witness a favorable growth rate in recent years.
Source: Fatpos Global
Oil and Gas industry in recent years has experienced low demand due to lockdowns and travel restrictions, that led to significant delays and cancellations of capital expenditure projects. Supply chain disruptions delayed the movement of people and goods, resulting in project delays and cost overruns. Additionally, social distancing tactics hampered the availability of staff and consequently resulted in higher labor costs. Besides, several projects were declined, which resulted in the bankruptcy of numerous EPC companies. The pandemic has led to economic uncertainty which has made companies avoid any form of risks and reduced investments in newer projects. Despite these challenges, EPC firms helped towards better cost optimization measures and focused on maintenance and upgrades for existing facilities.
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ATTRIBUTE |
DETAILS |
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Study Period |
2018-2034 |
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Base Year |
2023 |
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Forecast Period |
2024-2034 |
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Historical Period |
2019-2022 |
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Growth Rate |
CAGR of 5.9% from 2024-2034 |
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Unit |
Value (USD Billion) |
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Segmentation |
Main Segments List |
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By Service Type |
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By End User |
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By Application |
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By Region |
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Oil and Gas EPC Market size was valued at USD 50.2 billion in 2023 and is projected to reach the value of USD 94.8 billion in 2034, exhibiting a CAGR of 5.9% during the forecast period.
Oil and Gas EPC (Engineering, Procurement, and Construction) comprises a comprehensive set of services that are provided by companies that specialize in the design, procurement, and construction of infrastructure and facilities within the oil and gas industry.
The Engineering segment and Upstream segment accounted for the largest Oil and Gas EPC Market share.
Key players in the Oil and Gas EPC Market include Fluor Corporation, Petrofac Limited, Bechtel Corporation, Saipem S.p.A., McDermott International, Inc., Hyundai Engineering & Construction Co., Ltd., KBR, Inc., TechnipFMC PLC, Wood PLC, WorleyParsons Limited, SNC-Lavalin Group Inc., Larsen & Toubro Limited, National Petroleum Construction Company (NPCC), Chiyoda Corporation, China Petroleum Engineering & Construction Corporation (CPECC) and Other Prominent Players.
Rise in hydrocarbon demand and the development of natural gas are the factors driving the oil and gas EPC market.
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