BAKU, Azerbaijan, Sept.29
By Leman Zeynalova – Trend:
The global oil and gas market demand for large-diameter offshore pipeline, known as trunkline, is set for an annual drop of 26 percent this year, Trend reports citing Rystad Energy.
Although it is set for a significant drop from last year’s 2,913 km, offshore trunkline demand is holding up much better now than during the previous downturn, when demand plummeted to just 938 km in 2016 from 2,488 km the year before.
“The offshore trunkline market will recover to its prior levels in the next few years, driven by a handful of large transmission lines between regional markets and numerous export lines from upcoming offshore gas field developments,“ says Henning Bjørvik, energy service analyst at Rystad Energy.
The global trunkline market is divided into upstream export lines connected to processing or production facilities, and transmission lines used for downstream transport between regions and markets. Although connected, the market drivers and characteristics of the two trunkline types are quite different.
Transmission lines make up around half of the new trunklines forecasted up till 2024 measured by length, but in project count they amount to less than one third. As a result, alterations in the timing of a few of these can throw the market around quite a bit.
Despite the improving demand outlook for transmission lines, prices for the pipes themselves are expected to remain under pressure for the foreseeable future due to excess capacity in the global market for large-diameter linepipe manufacturing.
“Capacity still dwarfs demand, so even when demand picks up, we tend to find that there are always pipe mills with spare capacity that will offer competitive pricing to win orders so they can boost their utilization rates,” says Rystad Energy’s Senior Vice President for Energy Service Research James Ley.
---
Follow the author on Twitter: @Lyaman_Zeyn