High Demand For Crude Oil To Boost Oil Pipeline Infrastructure Industry

The global oil pipeline infrastructure market size has emerged as one of the most lucrative investment avenues due to the growing demand from various industrial sectors, worldwide. Oil is largely used for transportation and petrochemicals are used to manufacture a wide variety of products like medicines, furniture, solar panels, appliances, and cosmetics.

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With the demand for the product from many crucial industries, the consumption of oil is likely to grow at a rapid rate in the coming times. Crude oil, in particular, has gained significant demand due to the rising need for a network to offer a point of contact and accessibility to the resources. Some of the advantages of using crude oil include safety, low cost of operation, and an efficient transportation mechanism that supports its use over other means of transportation.

According to a report by the U.S. Energy Information Administration, the total production of crude oil as of January 1, 2021, stood at 11,000 thousand barrels per day. A massive boost in the use would require an adequate and strong oil pipeline infrastructure that will meet the wide demand, warranting an increase in infrastructure investment. It is estimated that global oil pipeline infrastructure market size could hit USD 135 billion by 2025.

Shale gas production in the U.S.

Regionally speaking, the U.S. has witnessed a massive boom in oil and gas production with the wide availability of shale gas. Market players are constantly working towards finding ways to increase the production levels, such as by drilling new wells.

As per the U.S. Energy Information Administration, in the year 2018, the total shale gas production across the nation stood at nearly 342,135 billion cubic feet. This sizable boost in production favors an economical boost in the region as oil and gas will account for a majority of the U.S. energy in the near future.

To support the use of natural gas across the region, the government is extending considerable investments for the up-gradation and addition of greenfield infrastructure to bring the resources to the market.

APAC — a leading consumption belt of petroleum products

Speaking along similar lines, APAC oil industry has also witnessed enormous growth due to the high energy demand. In the year 2019, 40% of Japan’s total energy consumption was from petroleum. It is safe to say that, large consumption demand would require a wide network of oil pipeline infrastructure.

India has emerged as one of the world’s largest consumers of petroleum products, especially crude oil. A report by the Ministry of Petroleum and Natural Gas, Government of India suggests that the total production of crude oil across the nation as of March 2019 stood at 2854.32 TMT.

The Indian government has also injected investments to increase the oil pipeline infrastructure offerings to meet escalating demands. The regional oil pipeline infrastructure industry is expected to witness considerable growth in the coming times.

Competitive market environment

It is worth noting that, the companies operating in the market are resorting to strategic alliances, mergers, acquisitions, among others to increase their geographical presence and also to advance their offerings to meet the high oil demands.

In 2019, Canada based- Pembina Pipeline Corporation inked an agreement to acquire Kinder Morgan Canada Limited as well as the U.S. arm of the cross-border Cochin Oil Pipeline System from Kinder for nearly USD 1.5 billion. This transaction increased the offerings of the company along with its geographical reach.

The eminent companies in the oil pipeline infrastructure sector include TransCanada, CRC Evans, CNPC, PetroChina, Pembina, Kinder Morgan, and Europe, to name a few.

In a nutshell, the rising import and export of oil from one nation to the other and along with certain incentives provided by the government to the oil companies will significantly contribute to the growth of the pipeline infrastructure deployment. Propelled by increasing consumption of oil and its by-products in various nations like the U.S., China, India, and Saudi Arabia, the growth graph of the oil pipeline infrastructure market is projected to register notable gains.

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