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The global oilfield chemicals market size was valued at USD 16.95 billion in 2021 and is projected to grow from USD 18 billion in 2022 to USD 29.27 billion by 2029, exhibiting a CAGR of 7.2% during the forecast period. The global COVID-19 pandemic has been unprecedented and staggering, with oilfield chemicals experiencing lower-than-anticipated demand across all regions compared to pre-pandemic levels. Based on our analysis, the global market exhibited a decline of 4.1% in 2020 as compared to 2019.
The oil chemicals are used in the exploration and drilling of oil & gas to improve the productivity and efficiency of the oil drilling process. Increasing product demand in various petroleum operations such as well stimulation, drilling, cementing, production, hydraulic fracturing, and enhanced oil recovery is likely to boost the oilfield chemicals market growth. The rapid rise in oil production and exploration activities increases the demand for various drilling projects.
Drilling fluids are another important class of chemicals employed predominantly in the exploration phase. Drilling fluids perform various tasks, including applying hydrostatic pressure to prevent formation fluids from entering wells and maintaining the temperature and cleanliness of the drill bit to maximize penetration level.
Drop in Oil & Gas Demand Significantly Affected Market Amid COVID-19
The outbreak of COVID-19, along with the accompanying economic slowdown, affected the oil and gas industry, which, in turn, impacted the oilfield chemicals market. Even before the COVID-19 outbreak, the oil and gas industry was experiencing challenges with supply and demand imbalance, and the pandemic intensified the issue even more. During the early stages of the pandemic, the COVID-19 crisis produced a historic drop in global oil demand due to lockdowns, travel restrictions, and economic uncertainty, prompting global supply chain disruption and delays across several industrial sectors.
The COVID-19 outbreak caught the oil & gas sector stakeholders by surprise, causing oil prices to plummet to new lows. In late April 2020, the benchmark for United States crude oil, West Texas Intermediate, plunged into negative territory for the first time, and the price of Brent crude, the benchmark for Europe and the rest of the world, also dropped. Although the global petroleum industry has recovered from the major demand shock created by pandemic, there is still a high degree of uncertainty owing to the emergence of new, more contagious virus variants. On the supply side, increased uncertainty has put producers in a dilemma, leading to investment choices that may result in either too much idle capacity or insufficient oil to meet demand.
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Rising Use of Eco-friendly Oilfield Chemicals to Propel Market Growth
Chemicals with lower exposure toxicity, reduced flammability or flashpoint, greater biodegradability, lower bioaccumulation, and sustainability in both application and production are examples of green solutions in the oil fields. Amid rising environmental concerns, manufacturers are adopting and developing new products that are cleaner and less damaging to the environment. For example, Nouryon, one of the key players, launched a new product category of demulsifiers that offers oil producers a more suitable option to separate crude oil from combination of natural gas and water. The discovery of new oil and gas resources in various locations, as well as the increase in shale gas and enhanced oil recovery (EOR) activities, are likely to improve growth prospects. Rapid growth and investment by global and regional oilfield service companies will fuel an increase in oilfield service activities and volume demand for these chemicals as exploration and production participants expand their operations in high-growth economies such as China, India, Brazil, Mexico, and Southeast Asia. More chemical producers are anticipated to develop oilfield chemicals that are sustainable and environmentally friendly as governments' increased focus on clean energy results in tougher legislation.
Petrochemicals to Surge Global Oil Demand to Offer Market Growth Opportunities
A major share of petrochemicals produced across the globe is consumed to produce plastics such as polyethylene, polypropylene, and polystyrene, among others. Demand for these plastics has significantly increased over the past few decades, especially in major end-use industries such as plastic packaging for food and other commercial products. This rising trend is likely to continue during the forecast period, especially in developing countries of Asia Pacific, Latin America, and Africa. Plastics extend the shelf life of food, reducing food waste while their low weight reduces fuel consumption when transporting goods. It offers several such immediate economic benefits and can assist in resource optimization, which is critical in the growth of emerging economies. Due to the increase in demand for petrochemical products, petrochemicals are expected to be the dominant contributor to oil consumption during the forecast period. Major oil-producing countries are aware of this trend and are establishing petrochemical complexes to capitalize on the cheap raw materials accessible to them. As people's purchasing power and standard of life improve in emerging economies, demand for petrochemicals is expected to rise in parallel. As a result, the market will benefit and expand.
Transitioning to Renewable Energy to Hamper Market Growth
Governments around the world are expected to take more aggressive measures to accelerate the transition to renewable energy during the forecast period. As a result of the pandemic and the subsequent drastic changes it caused to the oil and gas industry, a rising number of countries have started to focus on the potential of long-term recovery as a means of accelerating progress toward a low-carbon future.
Further fuel efficiency improvements, considerably higher electric vehicle penetration, and new rules to limit oil consumption in the power sector are anticipated to reduce overall oil demand during the forecast period since the fuel sector is the primary demand generator. These factors are expected to reduce demand for crude oil, thereby hampering the industry's growth.
Demulsifiers Segment to Dominate Market
Based on chemical type, the market is segmented into demulsifiers, corrosion inhibitors, water clarifiers, biocides, scale inhibitors, paraffin inhibitors, hydrogen sulfide scavengers, gas well foamers, and others.
The demulsifiers segment is expected to dominate the market in the forthcoming years and grow at a CAGR of 8%. Demulsifiers are used to separate water and oil from the oil field. They create changes in oil density and make separation easier by reducing corrosion of the pipelines. Thereby resulting in a reduction in the overall equipment maintenance cost. Factors that may be incorporated in the extensive application of water separation and oil from the crude water-oil emulsions, thus reducing the chances of adultery in the oil produced.
Corrosion inhibitors is the fastest growing segment during the forecast period. Corrosion inhibitors are applied to prevent metal equipment from corrosion damage when the metal surface is exposed to corrosive gases such as carbon dioxide, oxygen, and hydrogen sulfide.
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Drilling Segment to Hold Major Share During Forecast Period
On the basis of application, the market is segmented into drilling, cement, stimulation, and production.
The drilling application segment dominated the market share in 2021 and may continue its dominance during the forecast period. The increase in oil gas operations through the development of hydraulic fracturing and drilling processes shall drive the industry growth. In the drilling segment, these chemicals stabilize temperatures and prevent contaminated products from entering the drilling fluid system. They are also additives to the drilling fluid used to maintain hydrostatic pressure and to clear the wellbore from cutting. In addition, technological advances and the rise in drilling activities are expected to increase the product demand.
North America Oilfield Chemicals Market Size, 2021 (USD Billion)
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The market in North America is expected to dominate the global market during the forecast period. This is attributed to the increase in oil gas operations through the development of hydraulic fracturing and drilling processes. In addition, technological advances and rise in drilling activities are expected to increase the regional growth during the forecast period. The growing exploration and production of shale gas in the U.S. is expected to increase oil-based chemicals.
The market in Asia Pacific may witness the highest growth rate in terms of value during the forecast period. Increase in consumption and demand for shale gas from various industries, rapid urbanization, and population growth in the region are attributed to industry growth. The regional market growth is mainly attributed to rising exploration activities in India, Mainland China, South China Sea, and Southeast Asian countries. The growing demand for crude oil and petroleum and huge investment in the energy sector to develop the economy is leading the Asia Pacific region.
The Europe oilfield chemicals market size is expected to witness a significant growth rate during the forecast period. The growth is attributed to increased shale gas production and exploration along with growing demand for petroleum-based fuel from the automotive or transportation industry. According to the CEIC Data, in December 2019, the crude oil production in Germany was reported at 7.836 Barrel/Day. These factors may drive regional industry growth.
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Latin America and the Middle East & Africa are rapidly growing markets. These markets are mainly attributed to increasing oil exploration and drilling activities to meet the global demand for natural gas and crude oil. Few companies are looking into domestic manufacturing in Saudi Arabia on account of the country’s strategic location and proximity to other OPEC countries.
Novel Product Innovation and Acquisition Remains the Key Market Strategies by the Companies
The key oilfield chemical companies operating in the industry are Nouryon, Ashland, BASF SE, Dow and Chevron Phillips Chemical Company LLC., and others. Most of the players have been present in the industry and have large production capacities for a very long time. Companies are collaborating, acquiring, and introducing new products to gain a competitive edge in the value chain.
Several other companies, such as Halliburton, Huntsman International LLC., Baker Hughes, Solvay, Schlumberger Limited, Innospec, The Lubrizol Corporation, Kemira, and Flotek Industries, Inc. (Texas, U.S.), are active participants in the market.
An Infographic Representation of Oilfield Chemicals Market
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The global oilfield chemicals market research report provides a detailed analysis of the market and focuses on crucial aspects such as leading companies, sources, products, and applications. Also, the report offers insights into market trends and highlights vital industry developments. This report provides historical estimates & revenue forecasts at global, regional, and country levels and analyzes the industry's latest market dynamics and opportunities. In addition to the factors mentioned above, the report encompasses various factors contributing to the market's growth in recent years.
Value (USD Billion), Volume (Kilotons)
Chemical Type, Application, and Region
By Chemical Type
Fortune Business Insights says that the global market size was USD 16.95 billion in 2021 and is projected to reach USD 29.27 billion by 2029.
In 2021, North America stood at USD 9.19 billion.
Growing at a CAGR of 7.2%, the market will exhibit steady growth during the forecast period (2022-2029).
The drilling segment is expected to be the leading segment in this market during the forecast period.
Rise in oil exploration and production activities is expected to drive the market growth.
BASF SE, Privi Speciality Chemicals Limited, Givaudan, International Flavors & Fragrances Inc., Takasago International Corporation, and Solvay are major players in the global market.
North America dominated the market share in 2021.
The shift toward unconventional drilling operations is expected to increase the product adoption.
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