Oil and gas industry shows resilience amid late 2023 decline

Oil and gas industry shows resilience amid 16% QoQ decline in overall contract volume during Q4 2023 according to a GlobalData report.

By GlobalData February 22, 2024
Courtesy: GlobalData

Oil and gas insights

  • The oil and gas industry experienced a 16% decline in disclosed contract volume quarter-on-quarter from Q3 to Q4 2023, but saw a marginal increase in overall contract value from $46 billion to $48 billion, indicating resilience amid market challenges.

Amidst shifting market dynamics, the oil and gas industry faced a significant quarter-on-quarter (QoQ) decline of 16% in disclosed contract volume from 1,401 in Q3 2023 to 1,172 in Q4 2023. However, despite this downturn, a marginal uptick in overall contract value hints at resilience during the challenging times, reveals GlobalData, a leading data and analytics company.

GlobalData’s latest report, “Oil and Gas Industry Contracts Review by Sector, Region, Terrain, Planned and Awarded Contracts and Top Contractors and Issuers, Q4 2023,” reveals that the overall contract value marginally increased from $46 billion in Q3 2023 to $48 billion in Q4 2023.

Pritam Kad, oil and gas analyst at GlobalData, said, “The significant contract value in the quarter was largely driven by Tecnimont, Saipem, and NPCC’s significant contracts with ADNOC totaling $8.7 billion and $8.2 billion, respectively, for the Hail and Ghasha Development Project in Abu Dhabi, the UAE. These contracts were pivotal in elevating the oil and gas contracts landscape, potentially boosting opportunities for further growth and collaboration in the region.”

Courtesy: GlobalData

Courtesy: GlobalData

Operation and Maintenance (O&M) represented 54% of the total contracts in Q4 2023, followed by procurement scope with 22%, and contracts with multiple scopes, such as construction, design and engineering, installation, O&M, and procurement, which accounted for 13%.

ADNOC’s contracts with Tecnimont, Saipem, and NPCC involve significant responsibilities. Tecnimont will oversee the construction of an onshore processing plant, including gas processing units, sulphur recovery sections, utilities, offsites, and export pipelines. Saipem and NPCC, on the other hand, will handle the Engineering, Procurement, and Construction (EPC) of drilling centers, processing plants, and various offshore structures on artificial islands for the Hail and Ghasha Development Project.

Additionally, in the petrochemical sector, notable contract being SGC eTEC E&C’s  EPC contract from Sipchem and Tasnee for the expansion of an ethylene cracker plant in Al-Jubail, Saudi Arabia.

Kad said, “Despite facing challenges in the market environment, the oil and gas industry has demonstrated resilience. This is evident from the slight increase in total contract value, despite a significant drop in disclosed contract volume. Looking ahead, it is imperative for the industry to prioritize strategic investments and forge partnerships to navigate uncertainties and foster sustainable growth.”