Contractors, who help conceptualise, build, and maintain highly complex oil and gas facilities, are also the critical enablers of decarbonisation of the industry. Their vast domain knowledge, technical know-how and skilled workforce is integral to lowering the carbon footprint. They act as intermediaries who translate corporate decarbonisation strategies into practical operational and technological outcomes.
The role of contractors spans from advisory to technical execution and regulatory compliance, acting across upstream, midstream, and downstream operations. They also foster innovation, set up resilient supply chains, and drive efficiency to streamline project costs while ensuring optimum quality levels from the end product. In this regard, oil and gas contractors such as Technip Energies, Wood, McDermott, Saipem, and SLB are developing and offering newer technologies for emission reduction. They are expanding their portfolio offerings to include core technologies, such as carbon capture, utilisation and storage (CCUS), energy recovery, flaring reduction, and methane monitoring to detect leaks, measure emissions, mitigate and utilise them for productive purposes. Several of these have also ventured into the power generation and utilities sector to diversify their offerings in line with their traditional oil and gas clientele. Nevertheless, this market is still dominated by power contractors, including Vestas, and Siemens.
According to GlobalData, many contractors are focusing on specialised engineering and construction across diverse low-carbon initiatives to support oil and gas operators in mitigating emissions. Their engineering choices and cost curves materially affect project viability and speed to market. Some contractors are predominantly known for their technology offerings, such as Honeywell, Topsoe, and Maire (NextChem). Besides, industrial gas producers such as Air Liquide, Air Products, and Linde also offer end-to-end services on CCUS and low-carbon hydrogen production.
Of late, low-carbon energy developments have faced some setbacks due to technical, regulatory and financing challenges. Inflation has compounded cost volatility, leading companies to reconsider projects even when binding offtake agreements exist. Developers essentially relying on government subsidies and grants have had to rethink their project plans, causing delays and even cancellations. Instances, such as the rollback of the Inflation Reduction Act in the US can somewhat hinder the push for clean energy due to economic pressures. Naturally, such developments do have a bearing on contracting activity as well. Hence, it is imperative for oil and gas contractors to follow a balanced approach in their expansion plans towards low-carbon energies.
Further analysis on the role of contractors in facilitating energy transition within the oil and gas industry, along with insights, use cases, and competitive positioning, can be found in GlobalData’s new theme report, ‘Energy Transition Strategies in Oil and Gas Contractors’.
