Stabilizing political Conditions and Large Dependence of Iraqi Economy on Oil Revenue will drive the market in Future.
Demand for oilfield service has registered constant increase in value due to rise in output of crude oil over the period of time before declining marginally in 2017. Fall in oil price was compensated by increasing production in order to maintain the level of revenue. Revenue recognition was mainly done by major oilfield services companies which include Schlumberger, Halliburton, and Baker Hughes. Many Chinese companies have also made market entry in Iraq. The takeover of Mosul by Islamic State militants in June 2014 had fueled defense spending in 2013 and 2014, pinching the national budget so much that investments towards oil production are often insufficient to operate at max capacity leading to poor demand for oilfield services. The revenue generation was also impacted by maintenance of wells which have already aged and need significant investment in developing the infrastructure.
Southern Iraq maintained its dominant position in both Iraq oilfield Services and drilling services market. War in Northern Iraq was the main reason for decline in demand. Demand for operation related to oilfield services contributed the majority of the revenue followed by engineering, fabrication, and installations. Decommissioning and new explorations and seismic services contributed smaller share in 2017.
The report titled “Iraq Oilfield and Drilling Services Market by Region (North and South Iraq), by Oilfield Service Type (Operations, Engineering and Fabrication, Reservoir/ Seismic Services and Exploration, Decommissioning) – Outlook to 2022” by Ken Research suggested that market for Iraq Oilfield Services market will be driven by political stability and increase in production capacity. Global oilfield services companies including Schlumberger, Halliburton, Weatherford will maintain their dominant position and it is expected that Chinese players may gain larger market share in near future. Investment in offshore projects is expected in the long run which may further create additional demand for offshore based oilfield services market.
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Ankur Gupta, Head Marketing & Communications