Demand for pipes in the oil & gas sector, which is increasing at the rate of 30-35% globally, is likely to witness a shortfall in supply in the short term say industry experts.
India is planning to build 15,000-20,000 km of pipeline network in the next 5-7 years. Globally, around 2,50,000 km pipeline projects are under various stages of implementation.
Huge opportunity and increasing penetration of oil & gas pipeline is forcing the pipe manufacturers to increase production capacity. ?In the near term, there is shortfall in supply but in 24 months? time there will be enough new capacities to take care of the demand. However, there will not be any surplus capacity for next 5-7 years,? a Man Industries spokesperson said. Experts say, there is a sizeable market?both locally as well as globally?for larger diameter SAW pipes that are used for trunk transportation and the ERW pipes, which are being used for the intra-city distribution to the end consumers. ?There is a time lag in the oil & gas movement and the pipeline demand. However, the demand will continue for the next 3-5 years. Also there is huge opportunity arising in the replacement market of pipes in the US, Canada etc,? said Akhil Jindal, director of Welspun Group.
Agreeing to the short supply scenario, MS Arora, executive director and CEO of Zenith Birla (India) Ltd, said, ?The long order book position of pipe manufacturing companies proves that there is a shortfall in supply in this sector. On an average, there is a huge demand for pipes, especially from the oil producing countries.?
According to Assocham, with the increased availability of gas, the country needs to gear up quickly to meet the increased requirement of cross country as well as regional and local downstream gas distribution networks.
Ashok Punj, MD of PSL Ltd said, ?The demand is increasing but the industry is building capacities and is well geared to meet that.?