Global exploration, production market to hit $5.56 trillion

The global oil and gas exploration and production market is expected to increase from $4.12 trillion it recorded in 2015, to grow $5.56 trillion by 2022.

According to Wise Guy Reports, factors such as increasing population growth, usage of oil and gas in transportation industry, high standard of living, energy competence for industries and housing, modern technological developments of oil and gas exploration and production are some of the factors driving the market growth.

It noted that high cost of crude oil was hindering the oil and gas exploration and production market. “Moreover, Expansion of Gas to liquids (GTL) and increasing biofuels production growth rate are the challenging factors involved.

“North America dominated the global oil & gas exploration due to its strong production level in the US and separated export limitations could further support upstream companies to produce at strong levels in this region. Moreover, Asia pacific is anticipated to be the fastest growing market in terms of revenue during the forecast period driven by the growing demand for petroleum products in emerging countries such as China and India,” it added.

Another report by IBIS World said that recent drops in the price of oil and gas have largely driven the global oil and gas exploration and production industry’s contraction over the past five years.

It said that although the price of crude oil fell before 2015, the decline was minimal compared to the drops experienced in 2015 and 2016. “Though rapid industrialisation of countries like China and India boosted demand for petroleum products, high levels of production continue to pressure prices for crude oil around the globe. Industry revenue is expected to trend higher over the next five years; however, it will continue to face downward pressure. US production levels will continue to be strong, and the removed export restrictions could further encourage upstream companies to produce at strong levels in the United States,” it added.

According to the report, the global oil and gas exploration and production industry is in a mature stage of its life cycle.

It stated: “Over the 10 years to 2021, industry value added, which measures the industry’s contribution to the economy, is projected to fall an annualised 0.9 per cent over the period, largely due to massive declines in 2015 and 2016. In comparison, world GDP is forecast to rise at an average rate of 2.7 per cent annually during the same period.”

As such, the industry’s importance to the global economy is shrinking, which typically suggests that the industry is declining. However, stronger industry growth over the five-year period to 2021 is likely a better indicator of the industry’s overall importance. Overall, oil and gas exploration exhibits characteristics of a mature industry.”