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Middle East and Asia to support long-term pipeline market: Westwood

Industry

Pipeline installations will fall 19 per cent in 2020, however, demand in Asia and the Middle East to support long-term forecasts, according to a report by the oil and gas market research consultancy group Westwoord Energy

Even before the COVID-19 pandemic and subsequent oil price collapse, Westwood expected global pipeline installations to fall from recent highs, due to a combination of economic and permitting issues.

The collapse of the market, however, has trickled down to all sectors of the oil and gas industry, including the historically well-shielded pipeline sector, and exacerbated the expected contraction in pipeline installations and capital spending in 2020 and 2021.

Westwood anticipates a 19 per cent decline in pipeline installations in 2020, from a high point of 48,000 km in 2019. Capital expenditure is expected to fall by a greater amount, being 34 per cent lower in 2020 compared to 2019, mainly due to the completion in 2019 of several large-diameter pipelines with high associated capex per km.

Operational expenditure should be more insulated, falling by an estimated five per cent in 2019 as operators halt non-essential operations to meet local COVID-19 panic restrictions and tighten budgets in the lower price environment.

In the longer term, with expected market improvement, it is expected that a number of large kilometre pipelines in Asia and the Middle East will be sanctioned, helping to boost kilometres installed and capital expenditure as governments seek to expand production capacity and improve infrastructure to market exports.

Westwood reviews global onshore pipeline installation activity up to 2025 in the report ‘World Onshore Pipeline Market Forecast 2020-2025’, providing a regional overview of pipeline installations as well as the capital and operational expenditure.

To reflect the industry’s current uncertainty, this edition includes the potential impact that various oil-price scenarios could have on the pipelines sector on both new installation activity and opex.

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