A significant increase is forecast in the tonnage of corrosion-resistant and corrosion-resistant alloy grades of oil country tubular goods required globally in the next few years despite volatility in oil prices.
A significant increase will be seen in the tonnage of corrosion-resistant (CR) and corrosion-resistant alloy (CRA) grades of oil country tubular goods (OCTG) required globally over the next few years despite current volatility in oil prices, Fastmarkets MB’s research team and Westwood Global Energy Group forecast.
Globally, the project team has also ramped up the number of prospective offshore fields that could utilize alloy grades of OCTG and line pipe to 183 from 110.
An increase in well depths and the number of wells targeting reservoirs of sour gas - natural or other gases containing significant amounts of hydrogen sulfide - point to increased requirements for CR OCTG in the sector.
Middle East will lead charge in growth
In particular, we have revised demand significantly higher in the Middle East. The region is the largest consumer of higher-value OCTG because of several sour and tight gas (natural gas reservoirs that are locked in very impermeable, hard rock, making the underground formation extremely "tight") developments there, accounting for 39% of global CRA OCTG consumption.
Middle East national oil companies that operate under their long-term drilling programs are less vulnerable to fluctuating oil prices. For clad and lined pipe, the United Arab Emirates is a prime focus because sulfur capacity is growing strongly there.
Prices poised to rise
With the supply chain for delivering higher tonnages of these pipe grades becoming ever tighter, mill lead times are increasing to as long as 12 months. The team notes upward revisions for many of the longer-term forecasts for alloy prices, notably in the 13% chromium stainless steel (13Cr) OCTG grades.
Want to access this insight?
These revised forecasts are available in The Future of Corrosion Resistant Alloys report. To find out more, please click here.
The Fastmarkets and Westwood team behind this report will be speaking at the 22nd Middle East Iron & Steel Conference (MEIS) in the UAE and will also be presenting at a drinks reception in Dubai Marina on December 12. If you are interested in joining, please register here.