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Improved resource efficiency is required to drive the oil and gas IT spending market

Published by , Editor - Hydrocarbon Engineering
World Pipelines,


The global IT spending market in the oil and gas industry is expected to grow at a CAGR of around 1% during the period 2016 - 2020, according to Technavio’s latest report.

In the report, Technavio covers the market outlook and growth prospects of the global IT spending market in the oil and gas industry for 2016 - 2020. The market is further segmented into three categories, including services, software, and hardware.

“The widespread application of mobile technologies and cloud-based solutions (in tandem with growing investments in business intelligence solutions) may propel the market during the forecast period. Analytical capabilities are a key enabler for achieving sustainability in this highly expanding competitive environment,” says Amit Sharma, a lead IT professional services research expert from Technavio.

The Americas

The Americas hold the largest share of global IT spending in the global oil and gas industry. The large percentage share stems from the presence of technology driven economies such as the US and Canada. Major oil and gas players such as Exxon Mobil and Chevron have consistently adopted innovative technologies for horizontal drilling and hydraulic fracturing to improvise the oil and natural gas production process. These technological developments (combined with high oil and gas prices) boosted the production of abundant oil and natural gas resources in the region.

However, recent developments are expected to influence the capital expenditure (Capex) and operational expense (Opex) of oil and gas companies in a positive way. This will lead to a resurgence in spending on information technologies after 2017.

In contrast to markets in the US, reduced prices of oil and gas have not really impacted oil production in Latin America. Some companies such as Petrobras in Brazil have raised production volumes as new projects have come onstream. “Moreover, the gradual strengthening of oil prices may push market dynamics in a positive direction during the forecast period,” said Amit.

Europe, the Middle East and Africa

Europe is a developed and technology-oriented region that has actively adopted innovative tools and techniques to automate industrial production processes. The presence of tremendous hydrocarbon reserves in Russia has made the region an active supplier of oil and gas with Europe emerging as the cheapest source of supply, resulting in high gasoline exports to the US and China.

However, consistent declines in oil prices have resulted in erratic cash flows in the oil companies in Norway and the UK, which will affect both the will and the ability to make investments by oil companies. This has led to a drastic cut in the total expenditure of oil and gas companies.

The MEA region has experienced some lack of technological expertise and infrastructure. However, the lack of tandem production cuts among most of the OPEC members indicates positive market prospects for IT solution and service providers. The oil and gas companies’ IT investments are expected to remain steady toward adoption of third platform technologies (such as cloud computing, big data analytics, and mobility). The integration of these technologies with existing strategies of the oil and gas companies should prepare them for the ‘Big Crew Change’ and future cyber threats, such as attacks on industrial control systems.

Asia Pacific

The oil and gas industry in APAC has grown progressively in response to the increase in demand for oil and gas in countries such as China and India. The main growth factors of this region include a large population, robust economies, and rising disposable incomes. These factors have spurred the growth of automobiles and in turn cast a positive influence on the oil and gas industry. Despite lower oil and gas prices in 2014, the leading companies in APAC faced lesser issues compared to other regions of the world. Such immunity stems from the fact that most companies in APAC are large, have secured good financial positions, and have benefitted from strategic relationships with their respective governments.

Cost management shall remain the top priority of the oil and gas companies for the initial couple of years during the forecast period. These exercises may be driven by low margins.


Adapted from press release by Rosalie Starling

Read the article online at: https://www.worldpipelines.com/business-news/18052016/improved-resource-efficiency-is-required-to-drive-the-oil-and-gas-it-spending-market-3330/

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