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The Angolan ACS market

September 2009 News

In 2008, Angola overtook Nigeria as the largest oil producer in sub-Saharan Africa. Last year, production was estimated at 1,9 million barrels per day (bpd). This reflects a significant rise over the past decade. In 1997, the country’s output averaged 710 000 bpd.

The rise in production over the period 2007 and 2008 was mainly from the Greater Plutónio project and it is expected that this will sustain output at the quota agreed with OPEC of 1,9 million bpd.

The Angolan oil and gas market

The Angolan oil and gas industry offers a growing market for automation and control solutions (ACS). Robust fiscal spending on large scale infrastructure projects and sustained private investment in the oil and gas industry are expected to sustain economic growth despite tighter global liquidity conditions and the fall in oil prices in 2008.

The Angolan automation and software solutions market in the oil and gas industry has been significantly influenced by the growing demands for oil and gas and geopolitical factors.

In 2008, the total revenues in the Angolan oil and gas ACS market were estimated at $55,4 million. The market is expected to grow by a CAGR of 10,1% from 2008 to 2010, to reach revenues of $67,2 million. This is expected to be driven by oil and gas producers’ need to improve the efficiency of process capabilities and maximise capacity utilisation.

Although the market is posed for growth over the period 2009 to 2012, it is a highly competitive market in which to operate, due to the number of international suppliers active in the country and the relationships they have built with the end-users. The market is served by suppliers from North America, Europe, South America and Asia. Furthermore, end users are highly price sensitive and reluctant to switch suppliers. They are also increasingly looking for ‘one-stop shops’ for their automation needs to give them an advantage in terms of service and compatibility.

This need for after-sales service has been compounded by a shortage of engineering and technical skills in the country and a scarcity of local system integrators. It is therefore difficult for suppliers without a robust pool of in-house engineers and skills to enter the market. As a result, ACS suppliers with a larger product portfolio and skilled workforce are more likely to witness growth in the market.

The DCS product market is the largest and most significant ACS segment in the Angolan oil and gas industry as it is the control system of choice in the upstream segment, covering oil production and exploration. In 2008, DCS systems were estimated to have contributed 53,7% ($29,8 million) of the total ACS revenues in the Angolan oil and gas industry. This segment is expected to grow at a CAGR of 10,0% from 2008 to 2010 to reach revenues of $36,0 million in 2010. The bulk of DCS revenues are derived from the provision of services, due to the greater emphasis on service within the overall solution package. Services are becoming increasingly important to end users and will be seen as a key differentiator among manufacturers in their attempts to add value to their product offerings.

The scada market grossed revenues of $10,3 million in 2008. This is expected to grow at a CAGR of 9,1% from 2008 to 2010, to reach revenues of $12,3 million. High capital expenditure on infrastructure, particularly in the natural gas segment, is likely to translate into market opportunities for scada applications. However, these opportunities are more likely to translate into upgrades rather than establishments of new systems as and when the pipeline infrastructure is expanded.

The MES product segment is currently showing the highest growth in Angolan oil and gas ACS market. This market grossed revenues of $6,3 million in 2008. It is expected to show significant contributions to revenues, with a CAGR of 11,7% from 2008 through 2010. MES revenues are expected to reach $7,9 million in 2010. This growth will be driven by the increasing demand and emphasis on processing efficiency.

In 2008, the PLC product segment accounted for an estimated 13,1% of total ACS revenues in the oil and gas industry. Total revenues from PLCs were estimated at $7,3 million and expected to reach $8,9 million in 2010. The market is forecast to hold a significant part of the oil and gas industry revenues despite the increasing demand for more robust distributed control systems (DCS) by oil and gas producers. This is mainly due to technological advancements in the PLC segment, enabling them to carry out DCS functions.

Conclusion

The ACS market in the Angolan oil and gas industry is poised for steady growth over the period 2009 to 2012. Process optimisation and the development of new deepwater oil fields and natural gas infrastructure are all expected to contribute to this growth. However, the market is likely to remain highly competitive and closed to new entrants. End-users in this industry have well-established relationships with their suppliers and are unlikely to switch.

For more information contact Patrick Cairns, Frost & Sullivan, +27 (0)18 468 2315, patrick.cairns@frost.com, www.frost.com





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