Medium voltage market powered by oil and gas industry

A report by IMS Research indicates that the high price of oil in 2010 and 2011 will increase investment for production capacity expansion

12/24/2011


Medium voltage drives sales into the oil and gas industry will outpace the market in 2011 due primarily to the high oil prices in 2010 and early 2011, increasing investment for production capacity expansion, according to a new study, “The World Market for Medium Voltage Motor Drives,” from IMS Research.

In the past, oil companies reported significant profits when oil prices rose above $50 per barrel. IMS Research believes the threshold has changed to be closer to $80-$100 per barrel due to more cautious investment behavior for large capital expenditures following the downturn. In 2010, the price of oil was between $75 and $85 per barrel, which led to re-investment in the oil and gas industry. Even stronger, the first half of 2011, oil prices were between $85 to $110 per barrel providing a significant catalyst for the medium voltage drives market. Due to the profits seen from expanding production capacity at higher oil prices, medium voltage motor drives sold into the oil & gas industry are estimated to grow by over 20% worldwide in 2011.

Analyst Jenalea Howell states, “Sales of medium voltage motor drives into the oil & gas segment is predicted to continue increasing, as orders of medium drives in the oil & gas industry during the second half of 2011 remain strong, only increasing current backlogs and growth for 2012. However, growth will continue to slow due to the difficulties of sustaining such high growth, and more importantly high oil prices."

In addition, liquid natural gas (LNG) investment as well as oil and gas exploration and extraction in developing countries such as Brazil, Russia, and China will contribute to the continued growth into 2015. Overall, the oil & gas industry for the MV drives market is forecast to grow by a 17.1% average annual growth rate in terms of revenues from 2010 to 2015.

IMS Research

www.imsresearch.com

- Edited by Chris Vavra, Control Engineering, www.controleng.com



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