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The global pipeline transportation market size was USD 18.56 billion in 2020. The market is projected to grow from USD 19.21 billion in 2021 to USD 27.82 billion in 2028 at a CAGR of 5.4% during the 2021-2028 period. The global impact of COVID-19 has been unprecedented and staggering, with oil & gas activities witnessing a negative demand shock across all regions amid the pandemic. Based on our analysis, the global market exhibited a slight decline of -4.8% in 2020 as compared to the average year-on-year growth during 2017-2019. The sudden rise in CAGR is attributable to this market's demand and growth, returning to pre-pandemic levels once the pandemic is over.
The remarkable development in oil & gas activities worldwide has led to the growing demand for pipelines as a mode of transport. Revolution in all domains has led to increased industrialization, further leading to increased fuel demand, triggering an increase in the market for pipeline infrastructure. Pipeline transportation is one of the most sought-after modes of transport for oil & gas, coal, and water & chemicals due to its low cost of operation compared to other modes.
Reduction in Fuel Demand to Impact Global Pipeline Transportation Market Growth
The COVID-19 pandemic has a grave influence on every domain. Trades have experienced extensive losses due to lockdowns to limit the spread of the virus. Consequently, the energy requirement was reduced due to industries being shut or operating at reduced operational times. Furthermore, the intensive losses led to low investments by industries in capital infrastructure. Budget reductions further affected the expenditure on maintenance and other services. This altered the demand for pipeline transport. As the market for pipeline transportation is dependent on the conventional energy sector, the biggest collapse faced by commerce in a long time has also impacted the capital investment in the market.
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Increasing Energy Demand to Enhance Oil and Gas Pipeline Demand
The population explosion in urban areas due to the migration of people has caused a surge in energy demand from various sectors. The increased urbanization and industrialization have led to intensified demand for electricity and hence, oil, gas, and coal. As renewable energy is still in the initial stages of its life cycle in many parts of the world, most power is derived from conventional fuels like oil, gas, and coal. Pipelines are required to transport these fuels over long distances, as pipelines offer the most cost-effective transport option. Due to high energy demand, the increasing offshore exploration activities have led to a surge in pipeline infrastructure development. This has furthered the need for pipeline transport solutions and services.
According to the International Energy Agency report published in July 2021, the agency claimed that the energy demand is far greater than what can be obtained by renewable resources. This further enhances conventional fuel usage, leading to increased pipeline infrastructure expenditure.
Rapidly Expanding Oil & Gas Trade across Nations to Enhance Market
With rapid growth of industries across the globe, the energy demand has increased manifold in the last few years. This has led to a change in oil production. Most of the oil & gas resources are concentrated only in certain parts of various regions, like the OPEC countries; other nations rely on the oil & gas trade with these countries. This has led to an increased demand for safe and reliable oil & gas transport options across continents. Even though marine vehicles are extensively used for oil & gas transport between continents, pipeline transportation in logistics is the most preferred, owing to its cost-effectiveness. This is a strong trend enhancing market growth.
According to a press release of October 18, 2021, the gas-in procedure for the first string of the Nord Stream 2 pipeline was announced to be completed. It was announced that the pipeline was ready for gas transportation. The Nord Stream 2 is over 1230 km long and passes through the Baltic Sea from Russia to Germany.
Amplified Regulations for Oil Pipelines to Enhance Demand for Pipeline Transport Solutions
With the rise in demand for oil and gas, the development of pipeline distribution and transmission systems has gained momentum. The high pace of development has also led to several unprecedented accidents related to the pipelines. This has amplified the strictness of regulations.
The Pipeline and Hazardous Materials Safety Administration (PHMSA), National Energy Board (NEB), Petroleum and Natural Gas Regulatory Board are a few regulating agencies worldwide that frame policies and regulations for the smooth functioning of pipelines to enhance pipeline safety. The tediousness of these constantly evolving regulations requires additional support, strengthening the requirement for consulting and managed services.
Rising Adoption of Natural Gas to Enhance Market Growth
With increasing consumer conscience toward carbon emission reduction and the incapability of deriving energy entirely from renewable resources, the focus has shifted towards natural gas. Natural gas is being increasingly used in transport and homes for domestic usage. This has given rise to the demand for adequate distribution pipelines.
According to the Natural Gas Vehicle (NGV) Association, as of December 2019, the total number of natural gas vehicles globally is 28,540,819, and the natural gas fueling stations are 33,383. According to the U.S. Energy Information Administration (EIA), more than 50% of the residential sector in the country utilizes natural gas for space heating.
Rising Adoption of Renewable Energy to Hinder Growth
Increasing demand for cleaner energy led to the vast development of solar, wind, and other forms of energy worldwide. The European continent is especially developing its renewable energy capacity. This has led to a drop in investments in the crude oil industry and infrastructure development. This is anticipated to hinder the growth of the market.
According to the International Monetary Fund (IMF), major companies have reduced investments in the oil infrastructure. Due to the rapid oil reserve depletion, a drop-in replacement of oil reserves and capital expenditure has been observed since 2014.
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Greater Utilization of the Transmission Pipelines to Bolster Segment Growth
The market for pipeline transportation by type is broadly categorized into transmission pipelines, distribution pipelines, and gathering pipelines.
Transmission pipelines are used to transport oil, gas, coal, water, and other fuels over extremely long distances, like between plants or even between countries, in the case of fuels.
The distribution pipelines are used for transporting liquids to the end-users. The gathering pipelines are needed to collect the fluids for further processing or transmission. The utility of these types of pipelines is less than transmission pipelines in terms of length.
High Requirement of Automation & Control to Propel Segment Growth
The market for pipeline transportation is classified into automation & control, security solutions, integrity & tracking solutions, network communications, and others based on solution.
Automation & control solutions play an important role in the remote operation capabilities of major pipelines like transmitting fuels between continents. Solutions, such as Supervisory Control & Data Accumulation (SCADA) and Optimization Solution, surge the demand for automation & control solutions.
Security solutions involve video surveillance, intrusion detection, access control, fire & explosion safety, etc., to ensure the safety of the pipeline transport against pipeline transportation problems such as accidents and hackers. The integrity and tracking solutions involve leak detection, pigging solutions, batch tracking, and other solutions to ensure the smooth transport of products.
The network communication solutions refer to the setup and maintenance of optical fiber, microwave, and satellite systems used to manage overall communications between different parts and the pipeline systems.
The others segment refers to analytics and edge control, which are comparatively newer technologies in the field.
Timely Maintenance Requirement to Increase Demand for Maintenance & Support Services
Based on service, the market is classified into maintenance & support services, managed services, and consulting services.
Timely maintenance is required to avoid any pipeline failures and pipeline outages. This propels the demand for maintenance & support services.
Managed services involve the use of IT as an all-in-one service provider, in which all solutions and resources are effectively outsourced. These services are still new in the field and are anticipated to grow at a fast pace. Consulting services generally involve handling specialized segments of a project by specialized professionals.
Increasing Oil & Gas Pipeline Projects Will Lead to Segment Domination
The market is divided into oil & gas, coal, water, and others based on application.
With growing oil & gas production and the rising oil and gas trade between continents, growth in oil & gas pipeline projects has been observed. The high demand for pipelines for oil & gas is propelling the segment growth. For instance, in October 2021, the Nord Stream 2, one of the longest pipelines in the world, was announced to be ready for gas transportation.
The pipeline also transports coal slurry, water, chemicals, milk, refined petroleum products, and other fluids. The pipeline is considered one of the most cost-effective ways to transport liquids in terms of operational cost.
North America Pipeline Transportation Market Size, 2020 (USD Billion)
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The market has been analyzed across major regions, including North America, Europe, Asia Pacific, Latin America, and the Middle East & Africa.
North America is the largest market for pipeline transportation, owing to the region's excellent pipeline infrastructure development. The growth in power demand and high demand for natural gas leverages pipelines across the U.S. and Canada. According to the U.S. Energy Information Administration, the U.S. has a 3-million-mile natural gas pipeline network of the transmission line.
In Europe, Russia holds a potential market for oil and gas pipeline transportation, supporting the rising energy demand, which drives the demand for the market. In January 2020, Russian President Vladimir Putin announced a USD 300 billion worth of incentives for new oil & gas projects north of the Arctic Circle. This is anticipated to increase pipeline infrastructure investments in the country.
Asia Pacific is an emerging economy. A substantial increase in energy demand propels the need for oil and gas transport pipelines. China accounts for the largest market in the region, owing to high industrialization. In April 2021, PipeChina announced the construction of a major USD 1.3 billion worth gas pipeline in North China.
Latin America holds a massive growth potential due to new investment projects on oil and gas infrastructure development. The prospect of an oil & gas pipeline in Latin America is huge and is anticipated to bolster the market in the forecast period. Middle East & Africa is an important region for oil & gas activities. G.C.C. countries, such as Saudi Arabia, U.A.E., Qatar, Bahrain, Kuwait, and Oman, in the Middle East, are growing fast in energy demand. Iran, Algeria, Turkey, and Egypt are major oil producers. These countries are seeing a major pipeline infrastructure development, which is anticipated to propel the market growth.
Baker Hughes and Halliburton to Lead with Wide Geographical Reach
The competitive landscape of the pipeline transportation industry is fairly fragmented. The players are developing technologies to extend the extent of remote functioning. As the oil & gas sector further grows for compensating for the energy demand due to industrialization, the market is anticipated to grow further, with more pipeline transportation companies. Industrialization is also anticipated to enhance the other application segments as well.
An Infographic Representation of Pipeline Transportation Market
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The global pipeline transportation market report highlights provide regional and country-level statistics to better understand the user. Furthermore, the market research reports offer insights into the latest market trends, industry data and provide a market analysis of technologies deployed rapidly globally. The report analyses key players and their total revenues from the segment. It further highlights some of the growth-stimulating factors and restraints, helping the reader gain in-depth knowledge about the industry.
Value (USD Billion)
Fortune Business Insights says that the global market size was USD 18.56 billion in 2020 and is projected to reach USD 27.82 billion by 2028.
In 2020, the North America market was valued at USD 8.12 billion.
The market is likely to grow at a CAGR of 5.4%, exhibiting substantial growth during the forecast period (2021-2028).
The oil & gas segment is the dominant application segment and is anticipated to maintain its forecast period.
The increasing energy demand and the lack of adequate renewable energy capacity are key factors driving this market.
Baker Hughes and Halliburton are some of the key players operating across the industry.
North America dominated the market in terms of share in 2020.
With the rise in electricity demand, and the lack of adequate renewable energy capacity, the world has an increasing dependence on oil and gas, especially offshore. The increasing investments in pipeline infrastructure as a cost-efficient mode of transport are further augmenting the market.
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