NEW YORK, May 24, 2016 /PRNewswire/ -- 2016 Oil and Gas Capital Expenditure (CAPEX) and its Impact on the Process Equipment Market : Process Equipment Companies Continue to Wait Out the Brutal Short-term Economic Scenario
As a result of Saudi Arabia's decision to keep producing oil to retain its share in the global oil and gas market, the price of oil dropped below $30 for the first time in a decade, seriously impacting the CAPEX. The aim of this private market insight is to analyze the demand-supply gap in the crude oil market. The demand-supply gap is caused by several factors such as the rise in North American shale oil production, Saudi Arabia's and Russia's decision to keep producing oil and OPEC's unwillingness to support production. Other factors considered in this analysis include the expected crude oil price; impact on CAPEX in upstream, midstream, and downstream investments; and the impact on process equipment during the study period.
Key Trends Affecting the Process Equipment Market
Demand–Supply Mismatch to Continue Since 2014, there has been a prolonged period of supply–demand mismatch. As per the EIA, this mismatch is expected to continue up to 2017 when shale production is expected to taper off.
Prices to Reach $50 by 2017 Expected decline in shale production coupled with assurance of production freeze by major oil producing countries will help stabilize price.
CAPEX: Upstream vs. Downstream In 2016, for the first time in the past 3 decades, end users will decrease upstream CAPEX investment for a second year in a row. Having secured significant funds from high margins, end users are increasing downstream CAPEX investments.
Impact on Process Equipment
-The oil and gas industry is one of the largest end-user segments in the process equipment market.
• Declining upstream CAPEX investments are expected to severely impact the market in the short term.
• Midstream investments in North America and downstream investments in Asia-Pacific are key regions of opportunities.
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