Oil And Gas Corrosion Protection Market Overview
The oil and gas corrosion protection market size is estimated to reach US$18.3 billion by 2027 after growing at a CAGR of around 5.1% from 2022 to 2027. Corrosion is a major problem faced by the oil and gas industry. This is because carbon steel parts in oil and gas industry are often susceptible to suffer corrosion damage as they contain carbon dioxide (CO2) and hydrogen sulfide (H2S) which are inherently corrosive and cause corrosion on the internal surfaces of these components, tube lines, and the component fittings. Thus, there for protecting these components there is a need for Oil and gas corrosion protection systems. There is a rise in the demand for efficient corrosion protection systems and products due to the increase in upcoming midstream projects which includes new pipeline and LNG terminals to be constructed in the forecast period and thus will drive the oil and gas corrosion industry. This is due to extensive exploration and production of oil and gas fields is creating opportunities for companies for expansion of pipeline and other oil and gas infrastructures which will drive the market. Additionally, several major pipeline projects in Africa which include capacity expansion pipelines as well as newly constructed ones will propel the growth of the oil and gas corrosion market.
The COVID-19 pandemic has negatively impacted the oil and gas corrosion protection market. The oil and gas market is one of the worst-hit industries during COVID-19. Several global pipeline projects witnessed delays due to imposed lockdown restrictions in major countries like the United States, India, and others. According to a report by International Energy Agency (IEA), the oil demand in April declined by 25% and natural gas demand by around 4% which would constitute one of the largest contractions in energy industry. Due to this, many oil and gas companies got negatively impacted. For instance, Prime Exploration & Production Limited (PEPL), Nigerian based Oil and Gas Company’s total capital expenditure in 2020 fell down by 41% as compared to 2019. This reduction included the halt of infilling and drilling activities related to Preowei oil field development project due to covid 19 crisis. Thus, due to such oil and gas project halt during covid, there was low demand for corrosion protection systems and thus had a negative impact on the oil and gas corrosion protection
Oil and gas corrosion protection market Segment Analysis – By Product
The coatings segment held the largest share in the market in 2021 and is expected to grow at a CAGR of 4.8% between 2022 and 2027. Coatings are prepared-made from different materials which include epoxy, alkyd, polyurethanes, and acrylic, and can be used as an effective corrosion protection system on pipelines and other components in the oil and gas industry. Epoxy resin is the most preferred material used in the manufacturing of these coatings. This is because an epoxy resin lining effectively reduces the friction resistance between the fluid and the pipe. It is majorly used in production and conduction pipelines, and in oilfield drilling tools such as drilling pipes, pumps, tubing, and others where corrosion-related problems and paraffin deposits are likely to occur. According to an article by American Coatings Association, around 16% of the total global demand for binders used in coatings is supplied by epoxy resins. Due to the increased demand for coatings prepared by epoxy resins, the coatings segment will grow in the oil and gas corrosion protection market.
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Oil and gas corrosion protection Market Segment Analysis – By End Use
By derivative, midstream is expected to account for the largest share in the global market in 2021 and is expected to grow by over 5.0% during the forecast period. The midstream segment comprises transportation-related activities of crude oil and natural gas. This transportation is carried out using various mediums including pipelines, tankers, tank cars, and trucks. The outer surface of the tanks or pipelines is prevented from atmospheric corrosion with the help of corrosion protection systems like coatings and cathodic protection. There are various upcoming midstream projects in the forecast period. According to a news article by Petroleum Commission Ghana, The China Petroleum Pipeline Engineering Co. Ltd. (CPP), is working on the construction of a 1230 miles (1,980km) pipeline with a diameter of 20-inch diameter and is scheduled to complete by 2024. Anoh-Seplat is one of the major midstream gas projects with a capacity of 300 million cubic feet per day (MMscfd). The project is in currently in the construction stage and is expected to start operations in 2022. Due to such upcoming pipeline projects in the forecast period, there will be an increase in the demand for corrosion products which will drive the oil and gas corrosion protection market.
Oil and Gas Corrosion Protection Market Segment Analysis – By Geography
Africa is the largest and the fastest-growing region in the oil and gas corrosion protection market in the year 2021 is expected to grow by over 5.9% during the forecast period. This is because the African oil and gas sector is focused more on developing the midstream infrastructure for natural gas and liquids, with a major emphasis on gas processing, storage, and transportation networks. There are upcoming pipeline projects in Africa that will increase the demand for oil and gas corrosion protection. According to a case study report by Rainforest Action Network (RAN) Organisation, The East African Crude Oil Pipeline (EACOP) proposed a 900 mile (1,445-kilometer) pipeline that would transport oil from Hoima in northern Uganda to the port of Tanga in Tanzania. This would be the longest heated pipeline in the world and will carry 216,000 barrels of crude oil per day. The completion of this pipeline project would enable the expansion of the oil sector in Africa. According to an article by Tullow oil and gas company, in 2021, Tullow began the construction of two oil production wells, one Ten gas injector well in Ghana as a part of its multi-well drilling campaign. Due to such an increase in pipeline projects in the oil and gas industry, there will be an increased demand for the corrosion protection systems for pipelines from degradation from corrosive environments. Thus, the oil and gas corrosion protection market will witness growth in the forecast period.
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Oil and Gas Corrosion Protection Market Drivers
Development of Green Inhibitors for Oil and Gas Applications Driving the Demand for the Oil and Gas Corrosion Protection Market
There has been a significant increase in demand for green and environmentally friendly inhibitors. In offshore production many inhibitors are added to the aqueous phase to maximize the inhibitor efficiency and the unused inhibitor concentrates and their disposal into the ocean may cause damage to the marine environment. For instance, Benzotriazoles, which were used as inhibitors in heat exchangers were proven hazardous to marine creatures. Thus, the development of environment-friendly green inhibitors will drive the oil and gas corrosion protection market.
African Gas Pipeline Projects will Drive the Oil and Gas Corrosion Protection Market
An increase in upcoming gas pipeline projects in Africa will drive the market growth of the oil and gas corrosion protection market. There are few African nations, such as Equatorial Guinea, Algeria which have extended the natural gas value chain, but still, there are others that are yet to develop their natural gas resources. Several cross-border pipeline projects have been proposed, and are upcoming in the forecast period. For instance, The African Renaissance Pipeline Project (ARP), a proposed US$6 billion natural gas pipeline aiming to link the gas-rich Rovuma basin in Mozambique to Springs in Gauteng, South Africa. This will extend the pipeline by 1615 miles and the annual capacity will increase by around 13.2 tons of LNG thus increasing the access to fuel for industry and power generation. Thus, such huge projects including the construction of new pipelines will create a demand for oil and gas corrosion protection system to protect the pipelines from the corrosive environment.
Oil and Gas Corrosion Protection Market Challenges
Energy Transition towards Renewable form of Energy will be a Challenge for the Oil and Gas Corrosion Protection Market
The biggest challenge for the oil and gas corrosion protection market is that renewable energy industry is substituting oil and gas industry. According to a report by Atlantic Council Organization, there are policies that are starting to disincentivize fossil fuels, like the European Union’s Emission Trading Scheme which encourage the use of substitute technology and fuel, especially renewable energy like wind and solar energy. Thus, this energy transition will be a challenge to the oil and gas corrosion protection market.
Oil and Gas Corrosion Protection Industry Outlook
Technology launches, acquisitions, and R&D activities are key strategies that are adopted by the dominant players in this market. Oil and gas corrosion protection top 10 companies include:
Axalta Coating System Ltd.
The Sherwin-Williams Company
Kansai Paints Co. Ltd.
RPM International, Inc.
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The growth of the midstream sector which involves the transportation as well as storage of crude and refined oil as well as natural gas through pipelines, barge, oil tankers, trucks, and other) storage, will drive the demand for oil and gas corrosion protection systems for this equipment to protect from corrosive environments.
An increase in African gas pipeline projects will result in an expansion of pipelines, heat exchangers, and other types of equipment which will drive the demand for oil and gas corrosion protection.
An increase in demand for organic and green inhibitors will also create new opportunities in the oil and gas corrosion protection market.
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