The global 5G in oil & gas market is expected to grow at a CAGR of 25.81% during 2023-2030.
5G is amongst the key technologies that are gaining significant importance in the oil & gas sector. The oil & gas market includes operational activities conducted under extreme weather conditions and severe environmental challenges. Operation in these conditions face challenges such as low latency network connectivity, cybersecurity issues, and managing the network at remote locations. These things mandate the use of strong communication technology. 5G is one of the prominent technologies that effectively moderates these issues, as it offers ultra-high speed coupled with low latency communication between production sites and vessels. Increased use of 5G-enabled systems such as drones, robotics, and artificial intelligence (AI) enhances operational efficiency, thus, driving adoption in the oil & gas sector, further propelling the growth of the 5G in oil & gas market.
Key Advantages of 5G:
• Streamlining growing complexity in the operational activities.
• Managing the increasing competition from renewable resources.
• Supports improving margins by minimizing cost.
• Helps in timely maintenance and prevents equipment failure.
• Increases operational efficiency by employing decreasing unmanned downtime.
The 5G network provides robust connectivity and smooth communication essential for daily operational activities.
MARKET TRENDS & OPPORTUNITIES
Industry 4.0 To Boost 5G in Oil & Gas Market
Industry 4.0 is currently essential for all entities engaged in the production and manufacturing processes. Evolution in the utility sector mandates the incorporation of Industry 4.0 in day-to-day activities. The utility sector is an integral part of the new industrial revolution era. Transformations such as process automation, integrating machines for predictive diagnostics and maintenance, equipment health tracking, and digitizing other operational parameters require the integration of Industry 4.0 in the energy sector. Oil & gas companies across the globe are also mandating incorporation of Industry 4.0 in daily operational activities. Oil & gas companies, especially in the upstream sector, are incorporating the advantages of industry 4.0 to enhance their overall operations. This is also required to remain relevant in the market due to the rising competition from the increasing demand for renewable energy, electric vehicle, and new hydrocarbon sources. Industry 4.0 also enables unmanned drilling operations, forecast maintenance needs, and enable asset management. Modernizing services and solution offerings in tandem with the improvising industry practices is set to be the key to growth over the next few years.
Growing Adoption of Digitization in Oilfield
Oil & gas companies are proactively implementing digital transformation techniques in their operations, which can contribute towards the 5G in oil & gas market growth. The advancement in automation processes, sensing technologies, and data analytics drives these developments. Digitization in the oilfield or digital oilfield is the concept that integrates business processes with digital technologies such as IoT, AI, augmented reality, VR, digital twin, and cloud systems. This process supports companies by collecting real-time data from sensors, pressure and temperature meters, tank-level sensors, and others. Assimilation of such advanced technologies increases any oil or gas field’s operational efficiency.
• Enabling smooth decision-making regarding drilling in remote areas,
• Minimizes the unplanned shutdown of equipment as well as others,
• Enables the oil & gas companies to achieve maximum productivity by automation and monitoring of oilfields through live video feeds for visual monitoring and evaluation.
Shift Towards Renewable & Alternate Energy Sources
In the last decade, the evolution of renewable energy has been enormous. Production and the installed capacity of renewable technologies have increased substantially, driven by encouraging global government policies. In addition, increasing climate catastrophes such as floods, extreme rain, wildfires, and others have mandated the increased use of renewables as electricity sources. Renewable energy technologies improve energy security and mitigate the adverse effects of climate change. They also provide direct and indirect economic advantages, thus gradually reducing the dependency on fossil fuels. Reduced reliance on oil & gas and sustainability initiatives are expected to result in decreased oil & gas activities which are expected to eventually impact the adoption of 5 G-related digital technologies in the oil & gas sector. Such factors can eventually hamper the growth of the 5G in oil & gas market.
INSIGHTS BY APPLICATION
Based on application, the 5G in oil & gas market is divided into three segments: downstream, upstream, and midstream. The upstream industry accounted for the highest share of the global 5G in oil & gas market and is expected to reach USD 13.50 billion by 2030. This segment involves carrying out the most crucial activities, such as initial surveying and exploration of new fields and extraction and pre-processing crude oil and gas. Systems such as downhole drilling motors, oil platform tensioner systems, exploration stacks, and digital technologies such as IoT, AI, Big Data, and cloud computing have been integrated with almost all stages of oil & gas development.
Midstream oil & gas industry is one of the three major stages of the overall oil & gas industry. The prime activities at this stage include processing, storing, and transporting oil & natural gas. The global midstream 5G in oil & gas market is expected to reach USD 0.88 billion in 2023. The use of digital technologies in the midstream segment enables companies to transport oil & gas products safely as sensor track the location of the truck, prevent incidents and reduce unnecessary manual checks of the systems.
Segmentation by Application:
INSIGHTS BY SPECTRUM
The mid-band segment in the 5G in oil & gas market is the largest segment by spectrum and accounts for a share of 64.00%. Mid-band spectrum is appropriate for ultra-high-speed applications which require low latency. This spectrum dominates the market owing to its advantages, such as transmitting vast amounts of data across significant distances. It is essential to bridge the gap between rural and urban areas by offering good broadband speed and connectivity. In addition, evolving technologies such as the Multiple Input, Multiple Output technique (MIMO), Advanced Antenna Systems (AAS), and state-of-the-art beamforming technology support the use of the mid-band spectrum.
Segmentation by Spectrum:
China holds the most significant 5G in oil & gas market share globally and is growing at a CAGR of 24.39% during the forecast period. The country is amongst the top economies boosting the adoption and establishment of 5G technologies globally. Digital transformation is becoming necessary for organizations to remain competitive in the market. Various oil & gas companies in the country are adopting the latest technologies, such as AI-based solutions, predictive maintenance, and others, to gain a competitive edge and drive revenue growth. China is among the global leaders in 5G technology, with around 86,500 5G base stations. Furthermore, robust support from the government to promote digitization across rural and urban areas and in the industry is also expected to support market growth.
Following China, the US is expected to lead the global 5G in oil & gas market at second position with a share of 22.00% by revenue in 2023. The growth is supported by the high penetration of highly skilled labor, high technology, and the presence of many oil & gas companies such as ExxonMobil, Shell, Chevron Corporation, and others. These companies embracing digital technology across its operation are the significant elements expected to support market growth in the US during the forecast period. However, the strong control of the FCC over the 5G network for providing licenses and spectrum allocation is leading to the slow adoption of the 5G network.
Segmentation by Geography:
• Middle East & North Africa
• Saudi Arabia
• Rest of the World
COMPANY AND STRATEGIES
Major companies in the global 5G in oil & gas market are Huawei (China), Hitachi Energy (Switzerland), Nokia (Finland), and Ericsson (Sweden), among others. These companies serve the global industry with 5G, routing, and other technologies. These players have adopted strategies such as expansion, acquisitions, new product development, joint ventures, and others to increase their revenues in the 5G in oil & gas market. However, limited vendors are offering 5G services across the oil & gas industry, giving opportunities for the local and regional telecommunication and network technology firms to leverage their 5G network across the oil & gas industry.
Further, the competitive scenario in the global 5G in oil & gas market is deepening, and the fast-changing technological environment can adversely affect the companies as customers expect continual innovations and upgrades. The market is consolidated, with few players providing 5G networks in the oil & gas industry with high functionality. The 5G in oil & gas market structure is in an oligopoly state, characterized by a few top players who have significant influence in the market. Vendors are now focusing on developing their portfolios to drive growth. Vendors are actively investing in R&D and collaborating with stakeholders for better insights and revenue growth.
• Hitachi Energy
• Niral Network
• Sierra Wireless
Other Prominent Vendors
• Alibaba Cloud
• Google (Google Cloud)
• Microsoft (Microsoft Azure)
KEY QUESTIONS ANSWERED
1. How big is the 5G in oil & gas market?
2. Which region dominates the global 5G in oil & gas market?
3. Who are the key players in the global 5G in oil & gas market?
4. What is the growth rate of the global 5G in oil & gas market?
5. What are the key driving factors in the 5G in oil & gas market?