At 6.71% CAGR, OCTG Market Size to hit USD 74.95 Bn by 2027, says Brandessence Market Research

PUNE, India, Oct. 18, 2021 /PRNewswire/ -- According to Brandessence market research, the valuation of the  Oil Country Tubular Goods market will grow to USD 74.95 billion in 2025, growing from USD 47.66 billion in 2018. The market is set to register robust growth with a promising CAGR of 6.71% during 2021-2025 period.

The demand for oil is expected to surge by 3.8 million/barrels month-on-month by June, 2021. The growing demand for oil in Europe, and North America is the key driver of growth in 2021. The increasing oil production in the US remains a promising prospect for players in the Oil country tubular goods market (OCTG). For example, the US production of Oil increased 12.7% between 2018-2019. Furthermore, states like Alaska witnessed a record increase in production with 259 million barrels produced in 2019. Additionally, producers in New Mexico witnessed the second-largest increase in production with 226 million barrel increase, and Texas registered third highest increase with 179 million barrel.

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Oil Country Tubular Goods Market: Competitive Analysis

The oil country tubular goods market is a fragmented landscape, with growing opportunities for new players, thanks to new oil explorations in new regions, and growing innovation. As new regions open for business opportunities, and initial investment costs remain high, the opportunity for mergers, and collaborations remain high. Key players in the OCTG market are geared to focus on new innovation like carbon steel piping as its appeal remains increasingly important to end-players. Some key players in the OCTG industry are some major key players for global Oil Country Tubular Goods market are Tenaris S. A, Nippon Steel & Sumitomo Metal Corporation, ILJIN STEEL CO, TPCO Enterprise, Inc., Vallourec, National-Oilwell Varco, Inc., TMK Ipsco Enterprises Inc., and others.

Oil Country Tubular Goods Market: Key Trends and Insights

The growing high-costs of steel piping is leading to a major switch to carbon steel piping in the OCTG market. The carbon steel piping products remain far more cost-effective, and offer better shock and chemical resistance to the OCTG companies.

The demand from the petroleum remains highest as compared to demand from mining, and construction sector in 2020. The growing demand in North America remains a major promise, as International Energy Agency estimates that the global oil demand is rising at 96.2 mb/d in 2021, and will further increase by 3.2 mb/d in 2022.

A Eurasian country, Azerbaijan ramped up its production of natural gas by 36%. The production has increased the size of oil exploration field by more than 200 million cubic feet during 2017-2019 period. Furthermore, the country is connecting its supply to offer energy resources to Europe, leading to a long line of physical pipeline connection. This remains a key business opportunity for oil country tubular goods manufacturers.

The US exports have witnessed an exceptional trend in 2021. In May, the US motor gasoline exports averaged 9, 41,000 barrels per day. This was an increase of 276,000 or 41% more than the average during 2016-2020 periods.  Furthermore, similar numbers were seen in June, wherein exports increased to 9,35,000 barrels per day, against an average of 1,81,000 barrels per day on average during 2016-2020 period, an increase of 41%. Exports also remained similar in July, wherein, the increase reported was 24%. This is contrary to conventional exports in the region. This summer witnessed contrary trends to general exports in the US. Due to higher consumption of gasoline in summer in domestic markets, the export numbers are typically lower. However, the numbers remain promising for growth for players in the Oil country tubular goods market.

Oil Country Tubular Market: Covid-19 Impact

Like most markets, covid-19 has slowed demand growth in the global OCTG market. In the oil industry, the margins are still under pressure as demand remains below the expected growth. Furthermore, while profit margins are expected to improve in August, as seasonal maintenance operations take place. The global refinery stocks are expected to rise to 77.9 million/barrels per day, with an increase of 3.7 million barrels per day. The OECD or the Organization for Economic Co-operation and Development reports fall in stocks by 50.3 million barrels in June. The stocks are lower than pre-covid 2015-2019 period, promising an increase in oil drilling, and exploration in near future. Due to promising increase in oil demand, players like North Sea Dated witnessed a major price increase from $2.03 per barrel to take the price to $74.99 per barrel.

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Oil Country Tubular Goods Market: Key Drivers

According to the US Energy Information Administration's new report (IEO 2021), the global energy consumption will increase by 50% by 2050. The rising demand for energy in developing regions including Asia Pacific, Latin America, and Middle East & Africa remain key drivers of growth. According to the IEO2021, petroleum and other liquid fuels will remain highest energy sources in 2050, despite increased competition from renewables. The renewables are likely to grow at the same level as petroleum fuels; however, the fuel of traditional petroleum will still remain highest source of energy.

The growing demand for energy in Asia Pacific will continue to drive growth of oil drilling, and exploration. While energy consumption will continue to move towards renewable energy, the fuel-based energy supply is essential for grid stability in renewable energy. Furthermore, increased production in the Middle East, and dependence on major economies like India, and China on conventional petroleum products, and increased imports in these countries will remain key drivers of growth in the oil country tubular goods market.

Oil Country Tubular Goods Market: Regional Insights

The global OCTG market report is divided into key regions including North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. Policy changes in key countries like Brazil has sparked tremendous interest in oil exploration in the region. The changes in oil exploration policy in Brazil in ecologically sensitive areas, and renewed auctions for oil exploration activities remain major promise of growth in the global OCTG market. The growing reserve of natural gas in the US also remains a key promise for growth in the OCTG market. By 2019 end, the reserves of natural gas increased from 68% in 2018 to 71%. During this period, Ohio witnessed the largest increase with natural gas reserve volume growing by 10.4% Tcf. The increase natural gas exploration activity in Utica remains a key reason for this growth.  

Market Segmentation of OCTG Industry

By Type

• Drill Pipe
• Casing
• Tubing
• Other

By Area of Application

• Onshore
• Offshore

By Grade

• Premium
• API

Increasing Demand for Energy Worldwide is Driving the OCTG Market

The ever-increasing energy demand is the reason for oil and gas exploration and production attractiveness. Due to increasing demand of oil extraction the market of oil country tubular goods is growing rapidly. For example, India is heavily reliant on crude oil and LNG imports with about 82.8% import dependence for crude oil and 45.3% for natural gas/LNG. The net foreign exchange outgo is 63.305 million US$ in the financial year 2017-18 in terms of crude oil imports. India produced 35.2 million tons of petroleum products from indigenous crude oil production whereas the consumption of petroleum products is 204.9 million tons.

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