TPi July 2010

Pipelines – connecting worlds

Demand for pipelines rising worldwide The demand for oil and gas is rising worldwide, as is the demand for pipeline pipe materials. Studies carried out by the Organisation of Oil Exporting Countries OPEC and the US Energy Information Administration before the current economic crisis forecast oil and gas consumption to go up by 16% and 29%, respectively, by 2015. Last year the London-based steel business consultancy CRU foresaw double-digit growth rates for global pipe demand, assuming that 60% of the demand would be accounted for by large-diameter pipes measuring over 20" in diameter. Accordingly, the demand for line pipes was said to go up by 78% in Eastern Europe and by over 100% in the Middle East and Asia between 2007 and 2011. Altogether, CRU forecast an increase for line pipes from 14.9 million tons in 2007 to 24.2 million tons in 2011. In October 2008, Steel Tube News announced that demand for oil and gas pipelines would go up to 27,000km in 2007 and to 32,000 from 2009, and that demand for welded pipes would rise from 13 million tons to 15 million tons over the same period. Worldwide, almost 230,000km of pipeline were under construction or planned in autumn 2008.

The high demand for oil and gas line pipes for the energy sector was mainly responsible for bringing global steel pipe production in 2008 up to the previous year’s record level of approximately 120 million tons. In the segment of large pipes (welded pipes over 406.4mm diameter) production was estimated to grow by 1% to 18 million tons. Future opportunities for business growth in the segment of longitudinally welded large-diameter pipes are therefore foreseen especially in regions with fast growing energy needs and those with the relevant raw materials because of the high demand for high-quality pipes in demanding dimensions. Due to the problematic situation on financial markets, an increasing number of projects in the line pipe sector were postponed in the first quarter of 2009, while in exploration there was no major incentive to develop new oil and gas fields because of the low oil prices. Nevertheless, the situation was largely stable for large- diameter pipes, predominantly thanks to long-term projects in the energy sector that had already been initiated in 2007 and 2008. Of course, signs of a slow in demand could be seen here, too. Large pipe manufacturers posted a lower order intake than in the same period of the previous year.

60

Tube Products International July 2010

www.read-tpi.com