Oil and gas contracts market declines in Q1 2024

The oil and gas market saw a decline in Q1 2024, with contract values dropping 37% to $31.4 billion.

By GlobalData May 30, 2024
Courtesy: GlobalData

Oil and gas market insights

  • GlobalData reported a decrease in overall contract volume, falling from 1,346 in Q4 2023 to 1,142 in Q1 2024.
  • Many traditional projects faced delays due to demand outlook concerns and economic pressures, yet O&M contracts still made up 59% of the total in Q1 2024.

The oil and gas contracts market faced turbulence, with a notable quarter-on-quarter (QoQ) decline of 37% in disclosed contract value, dropping from $50.2 billion in Q4 2023 to $31.4 billion in Q1 2024. This decline was accompanied by a decrease in overall contract volume, reveals GlobalData.

GlobalData’s latest report, “Oil and Gas Industry Contracts Review by Sector, Region, Terrain, Planned and Awarded Contracts and Top Contractors and Issuers, Q1 2024 ,” reveals that the overall contract volume decreased from 1,346 in Q4 2023 to 1,142 in Q1 2024.

Pritam Kad, oil and gas analyst at GlobalData, comments: “Many traditional oil and gas industry projects are getting delayed or postponed due to concerns over demand outlook in oil and gas consuming countries amid the looming recession and high inflation, which is clearly evidenced by the decrease in both contract value and volume.”

Operation and maintenance (O&M) represented 59% of the total contracts in Q1 2024, followed by procurement scope with 16%, and contracts with multiple scopes, such as construction, design and engineering, installation, O&M and procurement accounted for 13%.

Courtesy: GlobalData

Courtesy: GlobalData

Some of the notable contracts during the quarter include Samsung Heavy Industries’ $3.44 billion construction contract for 15 LNG carriers, each of 174,000 m3 capacity, and Tecnicas Reunidas and Sinopec Engineering Group’s two lumpsum contracts combined worth approximately $3.3 billion from Saudi Aramco for the engineering, procurement and construction (EPC) of the Riyas Natural Gas Liquids (NGL) fractionation facility in Saudi Arabia,

In the petrochemical sector, Tecnimont recorded approximately $1.1 billion contract from Sonatrach for the engineering, procurement, construction and commissioning (EPCC) of a new linear alkyl benzene (LAB) plant with a capacity of 100,000 tons per annum (tpa) and utilities infrastructure in east Algeria.

Kad concludes: “Contrarily, oil prices are anticipated to be favorable for producers due to potential supply disruptions arising from geopolitical risks. GlobalData expects that delayed or near completion projects are likely to be pushed forward in the mid-term.”