The market for oil & gas drone services in Latin America is expected to grow at a CAGR of more than 70% during 2020 - 2025. Several oil & gas companies such as BP, Shell, and Exxon Mobil have started to digitalize their operation (drone services are a part of digitalization in oil & gas industry) across all the three sectors. The increasing investment of these companies in the Latin American oil & gas market is expected to drive the demand for drone services. Though drones are cost efficient and saves a lot of time, technological limitation such as shorter flight time, low speed, vulnerability to hackers, and susceptibility to weather are restraining the market growth. Also, lack of availability of sophisticated commercial drones which can perform inspection activity involving higher complexity is currently hindering widespread adoption in the market.
- With the emergence of upstream activities in the region, the demand for associated infrastructure such as pipelines and refinery are also expected to increase in these market, offering greater business opportunities for the drone service providers.
- Brazil is expected to dominate the market over the forecast period owing to the increasing adoption of drones in the upstream, midstream, and downstream oil & gas sectors of the country.
Key Market Trends
Brazil to Dominate the Market
- Brazil is estimated to hold the largest share in Latin America oil & gas drone services market in 2019 and is expected to continue its dominance in the coming years.
- In a bid to overcome the oil & gas downturn and attract investment from international oil & gas companies, the country has implemented several measures including implementation of a multi-year transparent bidding process, more flexible local-content policies, and the abolishment of the mandatory requirement that Petrobras be the sole operator in pre-salt oil fields, and has attracted interests from international oil & gas operators such as Shell, Exxon Mobil, BP and Wintershall, particularly for offshore developments.
- The Pre-Salt region of Brazil remains as one of the prominent center of attraction for offshore development, accounting for approximately 63% of the world´s deepwater oil discoveries and 36% of the world´s oil discoveries in the past decade. The region is expected to witness large number of exploration & development activities in the coming years as oil prices pick up coupled with other favorable factors such as favorable government policies and decreased project breakeven prices.
- Moreover, with increasing presence of international E&P companies with experience of using techno-economical technologies such as drones in other regions for the complex oil & gas projects, the demand for drone services for the monitoring of complex installation are expected to increase from the upstream sector.
- Currently, Petrobras controls all the refineries in the country and is using drones for few of its operations in upstream. However, drone is not a popular option for inspection in midstream and downstream operations, despite several accidents at the refinery sites in the past few years.
- In September 2019, a fire broke out at Petrobras' Revap refinery, located in the state of Sao Paulo. The facility has a processing capacity of 252,000 barrels per day, or about 14% of Brazil's total refining capacity. An year before, in August 2018, the country witnessed fire in two units in its Replan refinery, owned by Petrobras, a state-run Brazilian oil & gas company, resulting in huge loss of production, time and money.
- Similarly, in August 2016, a major mishap in the REDUC refinery, resulting in complete shutdown of the refinery, severely affected the country's fuel output. Such incidents are expected to encourage the downstream sector to turn towards drone for better inspection of their asset and mitigate risks.
Emerging Markets to Create Ample Opportunity in the Market
- Traditionally, oil & gas activities in the Latin America region has remained concentrated around Brazilian offshore waters, with companies showing greater interests for pre-salt licensing rounds and redevelopment of Brazil's mature Campos Basin oil fields.
- However, with the expected increase of 28% between 2015 and 2040 in global energy consumption with oil & gas accounting for approximately half the demand coupled with tightening supply-demand gap and increasing viability of offshore deepwater and ultra-deepwater projects, other regional majors such as Guyana, Argentina, Trinidad & Tobago, have expedited their oil & gas exploration & production activities, majorly offshore, in a bid to increase their share of production in global oil & gas market.
- Favorable government policies have resulted in attracting greater interests from both international oil & gas operators such as Exxon Mobil, and BP and regional players such as PEMEX in the development of the challenging offshore prospects of the new markets such as Guyana and Mexico, which is expected to require constant monitoring services, presenting an optimal opportunity for drone service providers in the coming years.
- Further, with the emergence of upstream activities, the demand for associated infrastructure such as pipelines and refinery are also expected to increase in these market, offering greater business opportunities for the drone service providers.
The Latin America oil & gas drone services market is consolidated. The key players in this market include Cyberhawk Innovations Limited, SkyX Systems Corp, DATUM INGENIERIA, and Texo Drone Survey and Inspections Limited.
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