The oil and gas contracts market faced turbulence, with a notable 37% quarter-on-quarter decline in the value of disclosed contracts, going from $50.2 billion in the fourth quarter of 2023 to $31.4 billion in the first quarter of 2024. This decline was accompanied by a decline in total contract volume, the data and analytics firm reveals. GlobalData.
The latest GlobalData report, “Oil and Gas Industry Contract Review by Sector, Region, Land, Planned and Awarded Contracts, and Prime Contractors and Issuers, Q1 2024”, reveals that the overall contract volume decreased from 1,346 in the fourth quarter of 2023 to 1,142 in the first quarter of 2024.
Pritam Kad, oil and gas analyst at GlobalData, comments that “many traditional projects in the oil and gas industry are being delayed or postponed due to concerns about the demand outlook in oil and gas consuming countries amid of the looming recession and high inflation, which is clearly evident in the decrease in both the value and volume of the contract.”
Oil and gas contracts
Operation and maintenance (O&M) represented 59% of total contracts in the first quarter of 2024, followed by procurement scope with 16%, and contracts with multiple scopes, such as construction, design and engineering, installation, O&M and acquisitions represented 13%.
Some of the most notable contracts of the quarter are Samsung Heavy Industriesworth 3,440 million dollars, for the construction of 15 methane tankers with a capacity of 174,000 m3 each, and the two global contracts for Gathered techniques and Sinopec Engineering Groupfor an approximate value of 3.3 billion dollars, with Saudi Aramco for the engineering, procurement and construction (EPC) of the Riyas natural gas liquids (NGL) fractionation plant, in Saudi Arabia.
In the petrochemical sector, Tecnimont signed a contract worth approximately $1.1 billion with Sonatrach for the engineering, procurement, construction and commissioning (EPCC) of a new linear alkylbenzene (LAB) plant with a capacity of 100,000 tonnes per annum (tpa) and utility infrastructure. in eastern Algeria.
Kad concludes: “On the contrary, oil prices are expected to be favorable for producers due to potential supply disruptions arising from geopolitical risks. GlobalData expects that delayed or nearly completed projects will likely be boosted in the medium term.”
