The past few years have been a rollercoaster for global relations and energy matrix changes. In such a dynamic, flexible industry much has happened since the previous edition of AMI Consulting’s Global Steel Pipe Coating Report, published in 2018.
The pipeline coating market is driven by investment in oil and gas. These industries are strongly affected by economics, but also by socio-political factors, military conflicts and diplomatic relations. The building of pipelines for these industries is also predicated on a few other sensitive factors. Pipeline construction is a big investment, with many stakeholders to appease, and many risks to mitigate; coalescing into complex projects that require to take account of issues such as finance, economics, environmental protection, socio-economic effects, return on investment and social mood, to name a few. As mankind manages to access oil & gas reserves that are more and more difficult to exploit, trends in crude prices increasingly become an issue. Large cross-border projects exhibit additional layers of complexity, because politics, as well as economic interests, render decision processes opaque and their outcomes often impossible to accurately predict.
The world is going through some turbulent times, the COVID-19 pandemic is a key source of uncertainty all around the world. Lows for Oil & Gas prices, energy transition policies and continuous political changes add challenges to the future of the industry. The recent change in the US presidency is a good example of this, since Biden’s roadmap greatly differs from Trump’s government policies. Biden plans to tackle climate change with hard-hitting measures and rejoined the Paris agreement shortly after being sworn in. 2020 oil revenues created budget deficits across the Middle East and most oil-dependent governments were forced to raise taxes and cut spending, together with debt raise via sovereign and corporate debt issuance.
On the other hand, energy consumption globally has nearly quadrupled in the last half century and there is no doubt that energy consumption will continue increasing. While oil may have fallen off the favoured list, gas is viewed as a cleaner alternative to coal. Changing energy preferences in developing nations, and growing populations (through migration) in temperate regions, are increasing the demand for natural gas. The market for renewable sources is expected to see above-average growth rates and cannot keep up with demand. Also gas is a cheap, quick and an easy source of energy short to medium term. Overall, fossil fuels still rule the energy market and in 20 years, oil and gas combined could still account for around 50% of the global energy mix, according to voices in the industry.
There is an appetite for new transportation routes, which have become of strategic importance to some countries, and even regions. While LNG transport plugs a gap in the demand, pipelines are still the most economic, reliable and safe means of product transport. Most pipelines continue to be manufactured from carbon steel – which necessitates active and passive means of corrosion protection. Furthermore, both the composition of oil and gas and the environments from which they are extracted present tougher challenges, necessitating more and better-performing coatings to provide protection against corrosion and mechanical stresses.
Finally, not only pipelines for the transport of water are expected to continue seeing growth thanks to ageing infrastructure but challenges related to climate change also open new applications for pipelines in water transport and carbon capture and storage.
This leads to the conclusion that the pipeline coating market is still a market to watch despite the uncertainties. This will not be uniform across the world. The question remains as to what the most likely evolution in the various geographic and application segments and, hence, how suppliers should position themselves to exploit the upcoming opportunities.
The study provides well-researched and reasoned answers, based on the collective expectation of the industry in its many different segments, as revealed through a large number of interviews with coaters, pipe manufacturers, raw material suppliers, machinery manufacturers, contractors, pipeline operators and end-users.