Global Oil & Gas Refinery MRO Services Market

  • August 2013
  • -
  • Frost & Sullivan
  • -
  • 112 pages

Maintenance Services Gain Importance Amid Surging Global Demand for Refined Fuels

Refinery maintenance is often overlooked due to high costs, shutdown time and the resultant loss of production. The growing global demand of processed fuels has increased the significance of refinery maintenance unprecedentedly. This research service deals with the steadily growing turnaround maintenance market in refineries. The study analyses the historic and futuristic scenarios of the industry, from 2009 to 2017. The forecasts provided examine the revenues and the cost of turnarounds across the globe with detailed regional analysis. Furthermore, it gives an elaborate insight into the market movements, prevalent drivers and restraints in the industry and an interesting sneak peek into the emerging trends.

Executive Summary

•The oil & gas refinery MRO (maintenance, repair, and overhaul) services market sustains steady growth throughout the study period, 2009–2017.
•Valued at $XBillion in 2012, the revenue is expected to grow at a CAGR of X% through 2017 to reach $XBillion.
•The global refinery capacity is set to increase from X million barrels per day in 2012 to X million barrels per day by 2017, at a CAGR of X%.
•Turnaround maintenance services for refineries is expected to become increasingly significant. Well-maintained refineries will be able to produce fuels more efficiently, boosting the throughput to suffice the growing demand.
•The increasing global financial instability is anticipated to increase the cost of turnaround maintenance services steadily. The increasing prices of resources is expected to have a dampening effect over the industry during the forecast period.
•Refining margins have been decreasing over the years, resulting in lower profits. While turnaround is an expensive activity, it increases the refinery efficiency, and thus, results in larger profits.
•Middle East is the fastest growing region followed by Asia Pacific owing to a great deal of refinery expansions and greenfield refinery additions.
•The Middle East & African region is expected to grow at a CAGR of X% while Asia Pacific is expected to witness a CAGR of X%.
•Europe and Americas are expected to grow at a sluggish but steady rate, primarily propelled by the aging refineries and their increased maintenance.
•The European region has the lowest growth rate, at a CAGR of only X%, whereas the Americas grow at X% CAGR.
•China, India, and Japan are expected to be the fastest growing markets in the Asia-Pacific region. Their geographical proximity to oil producing nations and inexpensive resources makes theseX countries ideal for refining and boosting the oil and gas refinery MRO services market as well.
•Brazil is emerging as a promising refining centre in the American region. Its contribution to the MRO services revenue is expected to increase considerably by 2017.
•One of Africa’s largest oil producing nations, Nigeria, is also an evolving refinery hub. With its increasing refinery capacity, it has a significant opportunity for the MRO service contractors.
•Saudi Arabia leads the refinery growth in the Middle East, while other countries in the region also look to increase their capacities, providing better than ever prospects for the highly fragmented oil and gas refinery MRO service market.

CEO’s Perspective

1. Chinese, Indian, and Middle Eastern ambitious refinery projects are primarily responsible for global turnaround MRO service market growth.
2. Maintenance revenue gets a boost as increasingly stringent environmental and quality regulations are enforced worldwide.
3. Innovative, inexpensive, and time saving methods for maintenance are required as refining margins decrease continually.
4. Africa provides newer opportunities for MRO service market as the region endeavors to become a prominent refining hub.
5. Forward integration in services industry by Engineering, Procurement, and Construction (EPC) companies are rapidly becoming a norm, further fragmenting the highly populated competition.

Market Overview—Definitions

Geographic Coverage: Global
Study Period: 2009–2017
Base Year: 2012
Forecast Period: 2013–2017
Monetary Unit: US Dollars

•The maintenance, repair, and overhaul of any equipment or facility is collectively known as MRO service.

•In the oil and gas refining industry, MRO services encompass turnaround and routine maintenance of the refinery process units. The scope of the study includes:
- Reactors
- Columns
- Piping
- Heat exchangers

•Electrical units, instrumentation, and rotary equipment are also a part of maintenance, however, they are not included in this study.

•Refinery captive power plants are out of the scope of this research service.

•The research service discusses the past performance, current trends, and future opportunities for MRO service providers in turnaround refinery activities.

•Segmentation of the study has been done on the basis of the size of the refineries:
- Large scale refineries: Output >X barrels per day.
- Medium scale refineries: X < output > X barrels per day.
- Small scale refineries: Output
•The study covers the refineries located globally, with the geography segmented as follows:
- APAC: The Asian-Pacific region includes the following countries–China, India, Japan, South Korea, Indonesia, Singapore, Thailand, Taiwan, Myanmar, Pakistan, Bangladesh, Bhutan, Australia, New Zealand, and others*.
- Europe: Covering the entire European region with countries in the EU X along with Russia, CIS countries, Turkey, Albania, and Croatia.
- Americas: This region includes Canada, USA, and Latin American countries.
- MEA: Covering the Middle Eastern and African nations.

•Monetary unit used throughout this study is US$, unless specified otherwise.

•Pricing of MRO services is based on the cost of providing each of the Xservices: Maintenance, repair, and overhaul for the facilities. These prices do not include the prices of the spare parts.

•The revenue is defined as the value of the contract between the service providing company and the owner of the facility.

•Turnaround maintenance (TAM) revenue: The revenue calculation for providing turnaround maintenance services in the study is as follows:
- TAM price has been taken to be X% of the average refinery construction cost.
- Total refinery capacity undergoing TAM has been calculated as a percent of total refinery capacity in a given year; this has been taken to be X%.
- The product of the TAM capacity and the TAM price gives the TAM revenue.

•MRO services classification:
- Breakdown maintenance: This is the traditional maintenance service provided wherein the broken down equipment is restored to its working form.
- Preventive maintenance: This activity is undertaken to avoid any future breakdowns. It is further classified into –

•Turnaround maintenance: Planned shutdowns to increase the life span of the unit and prevent any failures during operation is termed as turnaround maintenance.

•Routine maintenance: It is usual maintenance work carried mostly by in-house personnel.
- Predictive maintenance: The equipment is inspected and analysed to predict its life expectancy and thus schedule preventive maintenance activities to avoid any breakdowns.

•All MRO activities are handled in-house, except for turnaround maintenance.

•Three tiers of companies are involved in the overall maintenance of a refining facility –
- Tier I: These are the process licensors/OEMs and the point of contact for the facility owner. The process licensors are the companies that have provided the design and technology for the facility. OEMs are companies that have acquired the rights to develop patented technologies. These are usually globally operating conglomerates.
- Tier II: This category comprises of Lump Sum Turn Key (LSTK), EPC contractors, and consultants. While the LSTK and EPC contractors provide the services with their technical expertise, the consultants provide outside support during the turnaround maintenance activities. Their geographical reach expands to many countries.
- Tier III: These are the local maintenance companies for the third and the last tier of the process. These are the companies contracted by the tier II companies to provide maintenance and construction services, as well as engineering and procurement in some cases. Their geographical presence is local and limited to small value contracts.

•Basic units of a refinery are:
- Crude Distillation Unit (CDU) – The first step in a refinery is the distillation of the crude oil into rough fractions that undergo further processing.
- FCCU (Fluidized Catalytic Cracking Unit) – This process converts heavier oils into lighter products. Gasoline, heating oil, fuel oil and other important components are produced at this stage.
- Diesel Hydro Desulphurisation Unit (DHDS) – DHDU is used to reduce the sulphur content in diesel for environmental purposes.
- Sulphur Recovery Unit (SRU) – The SRU is used to recover Sulphur from the refinery streams.
- Merox – Mercaptan oxidation process deactivates the mercaptan sulphur compounds. It is used to treat gasoline, LPG, and heavier fractions.
- Demineralisation unit (DM) – These units provide the mineral-free water required for refinery processes.
- Effluent Plant Treatment (ETP) – The effluents must be treated before released from the facility according to the environmental regulations. Discharge unit uses ultrafiltration techniques to reduce effluent discharge levels to zero.

Turnaround maintenance (TAM) of refinery units:
•TAM is performed every X to X years. The shutdown lasts for about Xto X days, depending on the size of the facility.
•The present condition and life expectancy of the unit is assessed to determine the amount of work required during the shutdown.
•OEMs and process licensors recommend routine catalyst maintenance activities. The process licensor is engaged in catalyst filling recommendations. Catalyst filling can be a part of LSTK contract or an individual contract.
•FCCU reactors & regenerators and Hydrogen Unit Reformers require special contractors due to their complexity. EPC contractors and OEMs are usually preferred for this activity because of their experience.
•Routine maintenance of the refinery units are carried out according to the OEM’s or process licensor’s recommendations.
•Most of the routine maintenance works are done by in-house professionals however some companies outsource this activity for a few units, for instance, zero discharge unit and demineralisation unit, to service providers.
•MRO service opportunities mostly exist during turnaround maintenance.

Key Questions This Study Will Answer

• Why are cost-intensive MRO services important for a facility, especially in the wake of increasingly fluctuating oil and gas prices?
• How will the refinery MRO service market grow in the next 5 years as the industry streamlines its operations to cut costs along with a global increase in the demand for oil and gas?
• What are the current trends and what will be the major factors affecting the growth of the MRO services industry in the future?
• When will the global oil & gas industry realise the necessity and significance of MRO services and switch to newer methods instead of using obsolete servicing techniques?
• Which companies will emerge as leaders in the global market as the competitive landscape changes with forward integration by EPC contractors into the services sector?
• Where are the new hotspots for refinery MRO services amid the growing need for energy and depleting conventional but increasing unconventional fossil fuel sources?

Table Of Contents

Table of Contents

1. Executive Summary
2. Market Overview
3. Total Oil and Gas Refinery MRO Services Market
• Drivers and Restraints
• Forecast and Trends
• Market Share and Competitive Analysis
4. Small Scale Refinery Segment Breakdown
5. Medium Scale Refinery Segment Breakdown
6. Large Scale Refinery Segment Breakdown
7. Americas Breakdown
8. Europe Breakdown
9. Middle East and Africa Breakdown
10. Asia-Pacific Breakdown
11. The Last Word
12. Appendix

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