Oil and Gas EPC Market Size, Share & Industry Analysis, By Contract Type (Fabrication & Equipment, Construction & Installation, Management Services, Others), By End-User (Upstream, Midstream, Downstream), By Application (Onshore, Offshore), and Regional Forecast, 2024-2032

The global Oil & Gas EPC Market size was valued at USD 53.10 billion in 2023 and is projected to be worth USD 56.76 billion in 2024 and reach USD 92.49 billion by 2032, exhibiting a CAGR of 6.3% during the forecast period. The Oil & Gas EPC market in the U.S. is projected to grow significantly, reaching an estimated value of USD 22.42 billion by 2032, driven by the increasing investment in expanding & upgrading production capacities coupled with growing oil & gas trade globally.

The COVID-19 pandemic had an unprecedented and staggering impact on the market, with oil & gas EPC contracts witnessing a positive demand across all regions amid the pandemic. Oil & Gas Engineering, Procurement & Construction (EPC) includes engineering, procurement, and construction activities for upstream, midstream, and downstream oil & gas sectors. These activities include design, fabrication, construction, installation, equipment production, pre-commissioning, and maintenance contracts. Various oil and gas operators award contracts for EPC to service providers for different applications. These service providers make up the competitive landscape of this industry. 

Oil and Gas EPC Market Trends

Tremendous Demand for Hydrocarbon to Propel Growth

The demand remains high and is constantly increasing due to high consumption rate of hydrocarbons worldwide, anticipating the market's growth. To meet the extensive demand for oil and gas, government and private entities are taking the initiative to invest in the large-scale exploration of hydrocarbon. The energy sector is known for its huge investments, despite the unpredictable behavior of the oil market. For e.g. changes in crude oil prices. Hence, strategic and tactical planning of the hydrocarbon supply chain (HCSC), considering market uncertainty, is an important area of ​​research. The construction of HCSCs involves the integration of crude oil and natural gas supply chains.

OPEC countries in the Middle East & Africa are anticipated to dominate this industry, owing to high reserves of oil and gas, which is expected to increase the investment in the extraction of hydrocarbon by major oil companies in the world. Asia Pacific plays a crucial role in oil and gas consumption due to emerging and high potential economies such as India, China, Australia, and Malaysia. Due to the high demand, companies and government organizations are keen to increase hydrocarbon production. Thus, many contracts and agreements are underway to develop oil & gas production.

The major projects are on the bucket list to meet the evolving demand for hydrocarbon. Leading companies are very keen on exploring oil and gas, driving this sector.

Steadily Growing Oil and Gas Exploration to Augment Market Growth 

Several factors are driving future developments in this market. The key elements include population growth, changing demographics, economic growth, policy changes, technology advancement, and oil prices.

The international and local government policies impact the evolution of this market, mainly focusing on eradicating hydrocarbon poverty in developing countries. The Asia Pacific records the highest consumption and demand. China was leading in the Asia Pacific in hydrocarbon production and stood in the top ten countries globally. Chinese conglomerate Sinopec, CNPC, and Sinochem are eying on enlarging their production facilities to meet the rising demand. India, Indonesia, and Malaysia continuously strive to enhance their home production to cut foreign exchange on importing oil and gas.

India will more than double the area where oil and gas are explored and produced to 0.5 million square kilometers by 2025 and 1 million square kilometers by 2030 to increase domestic production and reduce dependence on imported fuel. The world's third-largest energy consumer will continue to rely on hydrocarbons to meet its growing energy needs for the foreseeable future.

OPEC and ally countries recently pledged to cut oil production to reach the steady and fruitful market thus, concentrating on the future development of this market. The primary source of income for the Gulf countries is oil and gas, which in, turn helps to stabilize their economy. Thus, government and private agencies are focusing on increasing their production in the forthcoming years.

The U.S. is highly developed in the production of shale gas. Companies are likely to invest heftily to meet the growing demand. To increase the production of existing oil wells and explore new wells, companies employ various techniques for maximum output. Russia, Norway, and the U.K. have steadily invested in offshore oilfield development to achieve high production rates.

Oil and Gas EPC Market Growth Factors

Industrialization and Rapid Urbanization to Bolster Growth

The world is witnessing immense growth in broad areas such as automobile, aviation, manufacturing, and construction due to substantial potential development in different industries in every corner of the world. Oil & gas plays an essential role in providing the primary energy source. Therefore, market is continuously growing.

Net imports of natural gas by India, the world's fourth-largest importer of liquefied natural gas (LNG), are expected to grow at an average annual rate of 4.9% between 2022 and 2050, according to the U.S. (EIA). The U.S. Energy Information Administration (EIA) expects India's domestic natural gas production and imports to help meet the increase in natural gas consumption.

Also, the extensive population growth has increased the demand for daily essentials. Therefore, companies are expanding their manufacturing units that require a continuous and reliable energy source. Thus, a significant portion of oil and gas is utilized in generating electricity to meet the enormous demand for energy.

The growing global transportation system, which plays a significant role in socio-economic development, utilizes many hydrocarbon products as fuel. Thus, the demand is consistent and steady, which is expected to increase exploration and production activities, thereby directly driving the market.

Growing Oil and Gas Trade Leading to Construction of New Pipelines to Augment Growth

The growing demand globally has led to the development of oil and gas fields in countries rich in resources. Therefore, there is increasing trade between producer and consumer nations. The rising energy demand and increasing trade have led to increased pipeline construction across countries for oil and gas transmission. Moreover, the massive utilization of natural gas in the end-user has advanced the development of the distribution gas pipeline network.

With growing energy demand, pipeline construction is anticipated to grow. This will result in many midstream EPC contracts for oil and gas for further sector development. This acts as a profitable opportunity for Market growth.

RESTRAINING FACTORS

Increasing Renewable Energy Usage Poses a Threat to Market Growth

The frequent fluctuation in the market prices has stunted hydrocarbon exploration. The COVID-19 has highly impacted the major oil producer companies in the world.

The rise in pollution levels and serious global warming threat is a by-product of the oil and gas industries. Leaders worldwide have come together to combat these significant issues to thwart the rising GHG emission. International environment regulatory bodies and government agencies are amending and enforcing strict rules and regulations on oil and gas producing companies.

Also, the recent trend and development in renewable energy, such as wind, solar, and geothermal, have gained momentum for an alternative to oil and gas. Oil & gas investment is not viable in the long term. Moreover, the automobile industry was going through a transformation phase with the introduction of electric vehicle. Batteries are playing a crucial role, as they are accompanied with a renewable source of energy to store an enormous amount of electricity. These factors are creating barriers to the growth of this industry.

Oil and Gas EPC Market Segmentation Analysis

By Contract Type Analysis

Numerous Construction & Installation Activities to Bolster Segment Growth in Market

The Market by contract type is broadly categorized into fabrication & equipment, construction & installation, management services, and others.

The construction & installation segment includes installation projects where a company provides services of installing platforms, pipes, pipe fittings, boiler, turbines, mud pumps, fans, engines, whereas the construction involves the building of drilling rigs, production platforms, and refineries at either onshore or offshore locations. The development of oil & gas fields and facilities has led to the domination of the construction & installation segment. This trend is expected to continue during the forecast period. 

Fabrication & equipment is an integral part of this industry. It involves the fabrication contracts for various tools and important machinery parts covering valves, boiler, turbines, pipes, pipe fittings, elevators, conveyors, machine tools, industrial storage, etc. The management services type of contract includes management of labor, plants, rigs, sites, etc. The rising penetration of IoT and industrial automation has increased software integration in this industry. Companies are focusing on providing the EPC for managing such software. The others segment includes all the remaining contracts involving site procurement services, designing services, maintenance services, etc.

By End-User Analysis

Growing Development of Oil & Gas Fields Will Lead to Domination of Upstream Segment

This Market is divided into upstream, midstream, and downstream based on the end-user.

Upstream operations include drilling and field development operations to enhance production volumes of oil and gas fields. The growing upstream activities, well development in onshore and offshore, and investment in gas fields are likely to propel growth in the upstream segment.

Midstream operations include the transportation of fuels from rigs to the refineries using pipelines and other modes of transport. Storage of oil and gas is also considered in the midstream segment. Increasing investment in pipeline transport and comprehensive storage solutions propels the segment growth.

The downstream activities include a refinery, sales, distribution, and marketing, requiring logistical support. Setting up refineries and increasing modifications in processing plants drive the segment growth.

By Application Analysis

Offshore Segment to Hold Lion’s Share Owing to Increasing Investments

Based on application, this market is divided into onshore and offshore. Onshore EPC projects are conducted on land.

Onshore is the traditional application sector. Growing investment in brownfield redevelopment, onshore processing facility development, and up-gradation will enhance segment growth.

Offshore EPC projects are conducted in water bodies like seas and oceans, wherein oil and gas are procured from subsea surfaces. With onshore oil wells getting matured in countries like Saudi Arabia and U.A.E., there is an increasing investment scope in offshore oil and gas field development.

REGIONAL INSIGHTS

The global market has been analyzed across major regions, including North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.

The Middle East & Africa has a growing industrial landscape and a developing economy. According to the World Investment Report published by the United Nations Conference on Trade and Development (UNCTAD), the Foreign Direct Investment inflow across the Middle East & Africa was USD 76,332 million in 2020. This is anticipated to propel the industrial landscape driving the region's Oil and Gas EPC Market. In 2020, global refinery runs decreased to 76.9 million barrels per day (mmbpd) and is expected to increase to 78.9 mmbpd. In Middle East & Africa, Saudi Arabia’s refinery runs are expected to increase to 77% in 2021 vs. 68% recorded in 2020. Global gas markets also experienced their most significant recorded drop in 2020, with an estimated 2.5% year-on-year (Y-o-Y) decrease in consumption.

According to the International Energy Agency, fast-growing markets in the Middle East and sub-Saharan Africa are projected to account for about 70% of global demand growth in 2021. Iraq is endeavoring to continue the development of its gas sector. Libya finally returned to form a unity government in January 2021 for the first time in years. Provided the country solidifies its political breakthrough and progresses with governmental consolidation and legislative reforms, the upstream investments are anticipated to portray a high growth rate.

The North Sea offshore oil & gas field development, majorly in Norway, the U.K., and Russia, bolsters EPC for oil and gas in Europe. Major upstream and midstream projects have helped the region grow magnanimously. The growing downstream activities in the U.S. have propelled the development of this market in the region. North America boasts of an intricate gas distribution pipeline network, contributing to the market dynamics.

Asia Pacific heavily invests in oil, gas, and coal. Malaysian oil & gas company, PETRONAS, awarded various projects to TechnipFMC in 2021. The consistent upstream investments in the region propel the segment growth. The USD 940 million project was awarded to Saipem by Petrobras to develop SURF in the offshore field. The offshore development in the region is anticipated to propel the market during the forecast period.

List of Key Oil and Gas EPC Companies

Larsen & Toubro and Petrofac to Lead with Management of Large EPC Contracts

The market is fragmented, with many small players providing construction, fabrication, and installation activities to the oil & gas sector. EPC contractors are actively operating to cater to the increasing demand for EPC services, owing to the growing demand for oil & gas reserves. Key players include Larsen & Toubro, Petrofac, TechnicpFMC, McDermott, Subsea 7, KBR, WorleyParsons, and Saipem, among other players. With increasing energy demand and greenfield & brownfield development activities, this market is anticipated to grow, promoting lucrative opportunities for market players.

LIST OF KEY COMPANIES PROFILED:

• Petrofac (U.K.)


• Wood (U.K.)


• Larsen & Toubro (India)


• McDermott (U.S.)


• Saipem (Italy)


• NPCC (UAE)


• WorleyParsons (Australia)


• TechnipFMC (U.K.)


• KBR (U.S.)


• Lamprell (UAE)


• Aker (Norway)


• Subsea7 (U.K.)


• Fluor Corporation (U.S.)

KEY INDUSTRY DEVELOPMENTS:

• October 2023 - NTPC Green Energy submitted bids on behalf of North Eastern Electric Power Corporation (NEEPCO) for the engineering, procurement and construction (EPC) package with land development for up to 300 MW interstate transmission system (ISTS)-connected solar power projects across India.


• October 2023 - ADNOC made the final investment decision and awarded two engineering, procurement and construction contracts for its Hail and Ghasha project in the Ghasha concession, the world's largest offshore sour gas development. The multibillion-dollar project is designed to achieve net-zero carbon emissions by integrating decarbonization technologies to capture 1.5 million tons per year.


• July 2023 - Petrofac, a leading international service provider to the energy industry, was appointed by Adnoc Gas Processing, a key subsidiary of Abu Dhabi National Oil Company (Adnoc), to deliver a significant new engineering, procurement and construction (EPC) project at the Habshan Complex, west of Abu Dhabi.


• December 2021 - McDermott was awarded three new EPC and installation projects by Saudi Aramco. The project includes EPCI of four drilling jackets, seven oil production deck modules, three contract release purchase orders (CRPOs) for construction of 45 kilometers of pipelines, more than 100 kilometers of subsea cables, and tie-in works to existing facilities. These will be utilized in Saudi Arabia's Zuluf, Ribyan, Abu Sa'fah, and Safaniya fields located offshore in the Arabian Gulf. The project is anticipated to be completed by 2023.


• September 2021 - Petrofac was awarded a contract valued at over USD 100 million by the Zallaf Libya Oil & Gas Exploration and Production Company. Petrofac will deliver Erawin Field Development Project Phase 1 Early Production Facilities to Zallaf in southwest Libya. The project involves EPC and the commissioning of surface equipment like well pads and flow lines at the oil field. The construction of a 100 km long pipeline to the El Sharara oil field to transport crude oil is also included in the contract.

REPORT COVERAGE

The global Oil and Gas EPC Market report highlights leading regions to offer a better understanding to the user. Furthermore, the market research report provides insights into the country-level and regional markets. The latest market trends and technologies deployed are analyzed in the report. It further highlights some of the drivers and restraints, helping the reader gain in-depth knowledge about the industry.

Report Scope & Segmentation

ATTRIBUTE	DETAILS
Study Period	2019-2032
Base Year	2023
Estimated Year	2024
Forecast Period	2024-2032
Historical Period	2019-2022
Growth Rate	CAGR of 6.3% from 2024 to 2032
Unit	Value (USD Billion)
Segmentation	By Contract Type Fabrication & Equipment Construction & Installation Management Services Others
By End-User Upstream Midstream Downstream
By Application Onshore Offshore
By Geography North America (By Contract Type, By End-User, By Application, By Country) U.S. (By Contract Type, By End-User, By Application) Canada (By Contract Type, By End-User, By Application) Europe (By Contract Type, By End-User, By Application, By Country) Norway (By Contract Type, By End-User, By Application) U.K. (By Contract Type, By End-User, By Application) Russia (By Contract Type, By End-User, By Application) Rest of Europe (By Contract Type, By End-User, By Application) Asia Pacific (By Contract Type, By End-User, By Application, By Country) China (By Contract Type, By End-User, By Application) India (By Contract Type, By End-User, By Application) Australia (By Contract Type, By End-User, By Application) Malaysia (By Contract Type, By End-User, By Application) Rest of Asia Pacific (By Contract Type, By End-User, By Application) Latin America (By Contract Type, By End-User, By Application, By Country) Brazil (By Contract Type, By End-User, By Application) Mexico (By Contract Type, By End-User, By Application) Rest of Latin America (By Contract Type, By End-User, By Application) Middle East & Africa (By Contract Type, By End-User, By Application, By Country) Saudi Arabia (By Contract Type, By End-User, By Application) U.A.E. (By Contract Type, By End-User, By Application) Qatar (By Contract Type, By End-User, By Application) Oman (By Contract Type, By End-User, By Application) Kuwait (By Contract Type, By End-User, By Application) Egypt (By Contract Type, By End-User, By Application) Iraq (By Contract Type, By End-User, By Application) Rest of Middle East & Africa  (By Contract Type, By End-User, By Application)