The oilfield services (OFS) market, including seismic services, is projected to lose $340 billion in purchases over the next eight years as peak oil demand arrives earlier and at a lower level than previously thought, according to Rystad Energy...
The oilfield services (OFS) market, including seismic services, is projected to lose $340 billion in purchases over the next eight years as peak oil demand arrives earlier and at a lower level than previously thought, according to Rystad Energy research.
The Covid-19 pandemic’s effect and the accelerating energy transition last month impelled Rystad Energy to revise its peak oil demand forecast to 2028, two years earlier than previously expected, at 102 million barrels per day, down from earlier projections of 106 million barrels per day.
OFS purchases are expected to drop to $473 billion this year from $625 billion in 2019 and remain flat in 2021 before starting a slow recovery. ‘Based on our updated peak oil demand forecast we now see OFS purchases returning to pre-pandemic levels only after 2024 in nominal terms, reaching $642 billion in 2025,’ said Rystad.
‘With a lower need and willingness among E&P companies to invest in oil and gas, capital expenditure across offshore, shale and conventional onshore resources will probably struggle to get back to 2019 levels,’ said Audun Martinsen, head of energy service research at Rystad Energy. ‘In nominal terms, offshore investment levels are projected to return to 2019 levels in 2023, with conventional onshore following suit in 2025 and shale in 2028. In real terms, however, investments in upstream oil and gas may never make it back to 2019 levels.’
The service market is now estimated to grow at a compound annual rate of 7.9% from 2020 to 2025, compared to 10.4% in previous forecasts. The biggest revision to service purchases comes from the engineering, procurement, production and installation (EPCI) segments, where lower sanctioning activity has had a negative impact, but segments related to wells have also suffered due to the slowdown in the shale sector.
