Page 22 - Impiantistica Industriale

FORECASTS

Exhibit 4: Number of upco-
ming Projects and the corre-
sponding amount of Capital
Expenditures per Operators
according to their profile
- Source Project Smart Ex-
plorer

These opposite strategies engaged by the different The increasing demand and
types of companies in response to the Covid-19
will reshape this sector for decades. Operators decreasing supply curves
strategies really depends on their profile Exhibit 4: “should cross again on summer,
hence the Oil & Gas market
• International Oil Companies (IOC): the
majors, in blue, have been quick to react to should retrieve its demand/
this situation by announcing plans to cut supply balance
cost and Capital Expenditures (CAPEX) by
20 to 30%. As they did in reaction to pre-
vious crises of 2008 and 2014, the IOCs are
safeguarding their cash-flow and profitabi- their assets will remain and should be con-
lity during this harsh period, but in counter- solidated at low price by other operators,
part they accept to lose market share. mostly Independents too, but benefiting
Thus, they represent less than 20% of the from lower break-even and level of debt.
projects Capex to come on the next five years Over the years, these Independents have pro-
from the whole market upstream, midstream ven to be very resilient and to adapt to each
and downstream. crisis. Their current market share of 30% in
• National Oil Companies (NOC): as usual in projects Capex should remain stable.
similar crisis, most of the NOC, in red, main-
tain their CAPEX, as they invest in counter-
cycle. For many producing countries, these
companies behave as central banks to keep The global market will mostly
running local economy and ensure social be driven by the NOCs and the
stability. In addition, such situation reduces “Independents
the projects costs, paving them the way for
increasing their market share at low price.
Being already dominant in the market, they
should exceed 60% of the whole projects Ca-
pex on the next two years. In this context, the global market will mostly be dri-
• Independent Companies (Independents): ven by the NOC and the Independents, especially
mostly based in USA and UK, the Indepen- in natural gas, petrochemical and offshore projects.
dents, in green, are highly exposed to the Regarding the pending risk of a Covid-19 se-
barrel price, and Covid-19 crisis came as a cond wave in the mid-term, it should be mitigated
bowling ball in their plans. Many of them suf- geographically and timely, as we can already see it
fer from high level of debt and break-even. in Asia. Governments deploy “Stop & Go” policies,
Numbers of them may disappear. Anyway, confining clusters as soon as they are detected

20 20 Impiantistica Italiana - Maggio-Giugno 2020