Page 12 - ITAtube Journal 1 2022

Market information
In the US, the rig count after a height of 1050 in 2018, declined, following the oil price, down to a minimum of 220 in July 2020. Since then, when the oils and gas prices started their price rally, the number of rigs inclined again to 650 dominated by the Permian Basin with about 310 as per 4th of March 2022. Other regions in the world showed similar trends.
The consumption of OCTG tubes and
pipes with a diameter < 16” is, as shown
in our previous articles, dependant on the number of rigs, as well as the depth of drill- ing and the capacity of the rigs. Therefore,
as soon as the supply and demand eco- system regains its balance, prices will calm down again, with consequences for the OCTG tube and pipe demand.
The consumption of pipes > 16” OD depends to a major extend on the pipeline kilometres built. This market segment is project based and very much depending on political strategies and availability of finan- cial resources in the relevant regions of the world. The ownership of pipelines is domi- nated by state-owned enterprises and such companies may be somewhat insulated from the market forces that are impacting the publicly traded oil majors.
The global pipeline expansion has slowed down in the past years and some projects were delayed due to the covid pandemic (Fig. 10).
Overall, however the pipeline expansion curve has been bent rather than broken, with pipelines continuing enjoying both political and financial support by govern- ments and major financial institutions. Anyhow pipelines are losing their social license. Intense opposition from landown- ers, climate activists and sometimes indig- enous groups are causing the cancellation or delay of high-profile pipelines. This to
an extend is also changing perceptions of pipelines as a safe investment. A prominent example is the cancellation of the US Key- stone XL pipeline.
A planned 212.000 km expansion in the global system of oil and gas transmis-
sion pipelines, amounting to US$ 1trillion in capital expenditures, is on a collision course with commitments by most large economies about transition to carbon neu- trality by mid-century. China, Europe, Japan and Korea have committed to achieve
net zero emission within the lifespan of pipeline infrastructure currently being processed. This raises the possibility that such planned projects, if built, may be per- manently retired. Even though the recent political developments may become a game changer and set entire new priorities. The following table shows the present sit- uation regarding pipeline projects around the world.
ITAtube Journal April 2022
Figure 10: Global annual pipeline kilometres build
Source: GEM, global fossil infrastructure tracker, December 2020
the demand for OCTG tubes and pipes is booming as well, leading to significant price increases for our industry (Fig.2).
The essential question right now is how sustainable are these high oil and gas prices and the associated high consump- tion of OCTG tubes and pipes? We should bear in mind that, besides the revitalisation of the industry across the world, effects such as political aggressions and interven- tion as well as speculation are currently driving prices. This includes, for example, supply shortages by OPEC and other oil- and gas-producing countries and political risks. In addition, we can see market spec- ulations and possible preparations for the raid on Ukraine, which led to almost empty gas reserves in Europe since importers were speculating on falling gas producer prices. Either way, it’s to be assumed that
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