Onshore Oil and Gas Pipeline Market

The global onshore oil and gas pipeline market is expected to grow substantially during the forecast period owing to the increasing demand for pipeline installation and the government initiatives to increase refining capacity. Moreover, the growing demand for refined products is expected to create an opportunity for the market players. However, geopolitical instability is expected to restrain the growth of the global onshore oil and gas pipeline market during the forecast period.

The demand for oil and gas is rising worldwide, owing to the increase in the use of oil and gas in various industries, such as power generation and transportation. According to the BP Statistical Review of World Energy 2019, the global oil production grew from 92,502 thousand barrel per day (TBPD) in 2017 to 94,718 TBPD in 2018 while the global natural gas production grew from 3,677.7 billion cubic meters (BCM) in 2017 to 3,867.9 BCM in 2018. The growth in production of oil and gas can be attributed to the improving global economic conditions. There has been an increased dependence on natural gas for electricity generation by the electricity generation companies worldwide due to its higher output and lower emissions compared to coal and diesel-powered plants. Additionally, as per the report mentioned above, the use of natural gas for electricity generation grew from 5,952.8 Terawatt-hour (TWh) in 2017 to 6,182.8 TWh in 2018. The production of oil and gas is expected to grow significantly during the forecast period. In line with the increase in the production of oil and natural gas, the rise in demand for oil and gas has led to an increase in the exploration and production of oil and gas globally. This leads to high demand for the installation of pipelines to transport oil and gas.

Many countries such as India and Canada are focusing on the development of onshore pipeline projects, which is expected to add to the demand for onshore oil and gas pipelines. For instance, in India, as per a report published by the Indian government in March 2019, the government announced its plans for the construction of a 1,987 km LPG pipeline from Gujarat to Uttar Pradesh to meet the demand for cooking gas in the country. Similarly, in June 2019, the Canadian government approved the Trans Mountain pipeline project for the transportation of oil from Alberta to the British Columbia coast in the country. Such developments are expected to increase the need for onshore pipelines for the transportation of oil and gas. Hence, the increasing demand for pipeline installation is expected to drive the growth of the global onshore oil and gas pipeline market during the forecast period.

Refined products include products such as gasoline, kerosene, and lubrication oils, which are derived from crude oils through processes such as fractional distillation and catalytic cracking. Refining is one of the essential processes for the transformation of crude oil into various refined products. The refining processes of crude oil consists of three stages, namely, separation, conversion, and treating. The demand for refined products is expected to increase as a result of the increased demand for fuels in the transportation, energy, and manufacturing industries. For instance, as per the World Oil Outlook 2017 report, between 2015 and 2040, the demand for oil and gas as primary energy fuels is expected to grow annually at 0.6% and 1.8%, respectively. Similarly, the global oil demand for road transportation applications is expected to reach 48.3 million barrels per day (mb/d) by 2040. In India and other developing countries, the demand for refined products such as oil and natural gas is expected to grow significantly. For instance, according to a report published by the Indian government, the demand for oil is projected to increase by 61% and reach 350 million tonnes of oil equivalent by 2030. Moreover, as per the Ministry of Petroleum and Natural Gas Annual Report 2016-2017, the Indian government announced its plans to invest USD 723.81 million for the development of two gas pipeline projects in India. The below graph depicts the global oil demand trend between 2017–2040 as per the New Policies Scenario.

The development of the pipelines helps in diversifying pipeline supply routes, trading partners, and economic ties between countries. Geopolitical instability refers to the disturbances caused by the influence of various geographic and political factors. These factors are major concerns for players in the oil & gas industry that export and import oil and gas. Political instability leads to a delay in the construction of the pipeline projects, which hampers the installation of onshore oil & gas pipelines as these pipelines are the integral part of midstream sector. For instance, the TAPI pipeline project, which was proposed for enabling the gas supply from Turkmenistan to India, got delayed due to unresolvable political and regulatory challenges. Internal regional conflicts, changes in oil prices, demand and supply risks, and political extremism result in cancellations, delays, interruptions, and financial losses in pipeline projects. This can lead to projects being scrapped or put on hold. For instance, in October 2017, TransCanada PipeLines Limited (Canada) canceled the Energy East pipeline project from Western Canada to the Atlantic coast in Canada due to unavoidable political and environmental issues. Moreover, regions that are prone to tsunamis and high tides create challenges for the installation and deployment of pipelines. Pipelines are essential for importing and exporting oil and gas across regions. Interruptions in the supply of oil and gas will hamper the demand for onshore oil and gas pipelines in the global market. Therefore, geopolitical instability is expected to restrain the growth of the global onshore oil and gas pipeline market during the forecast period.