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Oil & Gas

Sector

Oil & Gas

Nagesh Deshmukh
Nagesh Deshmukh

Sector Expert
   

Snapshot

The Global Oil & Gas Exploration & Production industry is $3.2tr in 2020
Low crude price including high cost of involvement in E&P of unconventional and traditional resources is driving the oil & gas market. Abundant availability of unconventional resources in the U.S. will further complement the industry growth. In 2016, Cobalt a U.S. based company has discovered natural gas in the Zalophus 1 well in Block 20 offshore Angola and recent discovery of crude and natural gas reserve by Sonangol could produce up to 2 million barrel a day for coming three years. Expansion of refineries to satisfy the increasing petroleum product demand may boost global oil and gas analytics market size. In 2016, ExxonMobil announced to expand refining capacity of Beaumont refinery in Texas with 40,000 barrels by 2018. Increasing exploration and production of oil and gas will augment the industry from 2016 to 2024. Strict government regulation to make sure safety during operation will further complement the industry growth. Rising investments in digital technology by O&G companies to increase workforce productivity and reduce cost will encourage oil & gas analytics market share during forecast period.
Segmentation By Sector Overview

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Number of Businesses
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Vehicles Sales in 2019
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Industry Employment
Sector Highlights


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INDUSTRY SCENARIO FOREIGN INVESTMENT INDUSTRY TRENDS MAJOR PLAYER

Crude oil is one among the foremost present and essential resources in lifestyle. The refining industry is one among the foremost powerful branches within the world economy. More than 4 billion metric plenty of oil is produced worldwide annually. Nearly 1/3rd of this amount is generated in the Middle East region. Saudi Arabia and therefore the US are the world’s leading oil producers, each liable for around 13% of the entire global production. Oil & gas companies are among the largest corporations worldwide. Among the top 10 revenue-based companies worldwide, 6 are in the Oil &Gas industry. ExxonMobil claims the highest market value in this industry & also has the second-highest market value of all companies worldwide. Oil demand and oil consumption have been rising slowly over the last decades. The long-term outlook for the oil industry, however, may be more promising. For example, most of the global top oil producing nations will have distinct higher production maxima in 2020 than in 2011.

  • The US is the top consumer worldwide, responsible for approximately 1/5th of the total global oil consumption
  • The U.S. is the world’s leading oil importer
  • Russia is that the 3rd largest producer, generating over 12% of the world's total oil production
  • Daily global oil consumption is expected to grow from 89 Mn barrels in 2012 up to 109 Mn barrels in 2035
  • Transportation and industry will continue to be the sectors with the highest demand for oil
  • Gazprom is the leading Oil & Gas Company based on net income
  • ExxonMobil revenue is estimated at around US $255,583 Mn

In 2019, ongoing oil price volatility is likely to make oil and gas company valuations more challenging, especially when the resource floor price is so unclear. In this landscape, it is difficult to anticipate a wave of M&A, particularly large transformational plays such as Shell’s 2015 acquisition of BG. Such deals are costly, risky to execute and difficult to demonstrate value creation aside from cost synergies. More likely is a handful of smaller tactical acquisitions that reinforce existing capabilities or build new ones, such as in low-carbon energy. Instead of M&A, partnerships and alliances could be an attractive option to acquire new skills and technologies or enter new markets without incurring substantial costs. Asset sales began in earnest at the beginning of the downturn. The pace may slow down, but there remain opportunities for further portfolio streamlining with some potentially large assets in play. BP is ahead of schedule for its 2019 divestment plan following its acquisition of BHP Billiton’s US onshore for $10.5 billion and selling its Alaska position and its Oklahoma SWOOP acreage. Its other legacy acreage remains, however, so there could be further divestitures in 2020.

  • The combined value of the top Enagas, National Pension Service
  • The Blackstone Group, GIC and Universities Superannuation Scheme’s $5.69bn private equity deal with Tallgrass Energy
  • The $5bn asset transaction with Apache by Total
  • HC Holdings and Showa Denko’s $4.51bn acquisition of Hitachi Chemical
  • HC Holdings and Showa Denko’s $4.51bn acquisition of Hitachi Chemical
  • Lone Star Funds’ private equity deal with BASF Construction Chemicals (UK) for $3.52bn
  • North America led the activity with deals worth $17.88bn

The world will continue to demand more and more energy in the next years. Data from the World Urbanization Prospects study prepared by the United Nations Organization (UNO) in 2011 indicate that the global population will continue to grow at a pace of 0.8% per year from 2010 to 2040, jumping from 6.9 billion people in 2010 to close to 8.9 billion in 2040. The search for products – automobiles, household appliances, machines in general and electronic devices – that consume less energy is one of the major vectors of industrial innovation today. World Bank research reflects this: between 1980 and 2010, global Gross Domestic Product increased, but with 33% less consumption of energy. In other words, over 30 years, more wealth was produced with proportionally less energy. This is a direct function of successful efforts (of public and private initiatives) to improve energy efficiency.

  • Increased energy demand due to social and demographic factors
  • Increased energy efficiency
  • Increased cost of oil extraction
  • Growth of non-conventional natural gas production
  • Increase in Electric Vehicles
  • Exports of U.S. oil and liquefied natural gas (LNG) are expected to grow with the increase in infrastructure capacity in 2020
  • Sudden supply outages will have smaller impact on oil prices
  • Bankruptcies in the U.S. shale patch are set to grow
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