The latest edition of Westwood's World Onshore Pipelines Market Forecast reports that 210,822 km of pipeline, averaging 42,164 km per year, will be installed between 2025 and 2029. This represents a 7% increase on the hindcast, which was impacted by Covid-19 demand destruction.
Gas pipelines are expected to lead installations over the forecast, accounting for 71% (~149,000 km) of the total. Demand for gas pipelines remains strong in most regions, with campaigns underway in many countries, especially in Asia, Latin America and the Middle East, to expand domestic gas infrastructure. At the same time, the US is expanding export pipeline infrastructure from shale plays to meet gas demand from the growing number of LNG export terminals. Furthermore, traditional Middle Eastern oil producers, such as Saudi Arabia and the UAE, are heavily investing in new gas projects for both domestic use and export.
While only accounting for 29% of the total demand, almost 62,000 km of liquid pipelines are still expected over the forecast, representing a Capex of US$65 billion. While much of this will be driven by crude projects, with a significant number still expected to progress over the forecast, new pipelines to transport the ever-increasing NGL and condensate production from the US, as well as many OPEC+ nations, boosts the outlook for liquid pipelines above where it would otherwise be.
On a regional level, North America is expected to continue to lead activity over the forecast, accounting for 34% of forecast installation. This will be followed by Asia (28%), where China and India will dominate pipeline installations, and the Middle East (13%). Project costs in the US and Canada are among the highest globally, with high dayrates, long approval process and a history of project delays, raising costs. As a result, North America will account for a larger proportion of Capex than installations, with a spend of US$128 billion forecast, 45% of all Capex. Outside of North America, Asia is expected to account for 22% of total Capex, the only other region expected to account for more than 10% of the total.
Uncertainties in the global energy market remain, which have been exacerbated by the current fluctuating US trade tariffs, especially those on steel, adding pressure to an industry already facing permitting and financing challenges. At the same time, questions over the need for additional supply, especially for liquids, are growing given sluggish demand growth and the mooted return of previously restricted OPEC+ crude. Despite these risks, Westwood's report indicates that the fundamental factors that drive new pipeline installations are strong and are expected to remain over the forecast.
Source: Westwood Global Energy Group