Rystad Energy’s projections place the global energy market for suppliers in a seven-year feast, following a seven-year famine that ended in 2021.
The analyst said last year was a turning point with the post-pandemic recovery and record high gas prices and strong oil prices, allowing oil and gas companies to lift their investments by 20%.
“Global oil and gas suppliers look set to echo the biblical story about the Egyptian pharaoh’s dream of seven years of feast and seven years of famine – only in the opposite order,” says Audun Martinsen, partner and head of energy service research at Rystad Energy. “All signs point towards 2022 being the start of another super cycle for the energy services sector”.
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The company expects the global market for oil and gas contractors to peak at US$1 trillion in 2025 and remain at high levels for several years thereafter. On average for the 2022-2028 period, Rystad Energy projected that overall oil and gas spending will average US$920 million annually.
Helped by strong growth in midstream to liquefy, transport, and re-gasify natural gas, overall oil and gas spending will stay above $920 billion annually on average for the 2022-2028 period.
The analyst firm sees risk of another downturn cycle in oil and gas after 2025, but said that oilfield service suppliers should be able to balance it out by branching out into other parts of the wider energy market – and in so doing, expanding the overall target market for contractors. It said the key for suppliers is to continue chasing obvious opportunities within geothermal energy, hydrogen, offshore wind, and carbon capture, utilisation and storage.
Together with oilfield services, Rystad Energy said this expansion into other energy areas could provide a US$1 trillion market for suppliers by 2025, which could be sustained for several years after that.