Frost & Sullivan: Shift From the US to China in Equipment Demand in the Oil & Gas Industry

LONDON, April 6, 2010 - Although the European and US markets will continue to present challenging
conditions and limited growth potential for the oil & gas industry throughout
2010, the Middle East and Asia are expected to drive demand of equipment. The
shift in demand from the US to China will affect equipment manufacturing
resulting in a higher number of orders covered by Asian manufacturers. For
this reason, China and the Far East are widely seen as the motor for growth
across the next few years for midstream operations, and Europe and the US for
LNG and gas infrastructure.

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New analysis from Frost & Sullivan, Oil & Gas Industry - Overview of
Major Indicators, finds that despite continued price fluctuations in 2009,
oil prices are expected to stabilise around USD 80-85 for most of 2010,
encouraging exploration and exploitation, slowing the decline of the global
rig count and seeing many contractors looking to rekindle projects left on
hold in 2008. "While the initial good news helps to improve the overall
outlook, demand remains weak," argues Enguerran Ripert, Frost & Sullivan
Consulting Analyst. "Capital markets remain rigid, commodity prices
insufficiently stable and real demand growth still low."

Equipment manufacturers across the Oil & Gas market have been facing
falling capacity levels and decreasing prices while the number of order
enquiries has increased substantially. This is attributable to the continued
volatility of raw material prices and to the uneven nature of the order book
size. Because the distribution of available capacity is not even, many
manufacturers are struggling to cover costs. "One possible outcome is
consolidation across the industry, which is likely to increase in 2010, but
also the signing of large framework agreements making the most of cheaper
capacity," says Enguerran Ripert. "This hedging tactic can be beneficial for
both parties, but is likely to happen with vendors already on the approved
list of buyers."

The nuclear industry has cannibalised some of the value chain previously
dedicated to the Oil & Gas sector driving some companies operating in both
sectors to focus their investments on the nuclear sector. These realignments
of manufacturing capacity have not yet had a major impact on the Oil & Gas
industry, but if oil prices increase faster than anticipated, serious
bottlenecks may be encountered at the equipment level. The lucrative nuclear
industry also has high barriers to entry, and investments made towards it,
are only recouped slowly but over a longer period of time.

If you are interested in more information on this research, please e-mail
Chiara Carella, Corporate Communications, at chiara.carella@frost.com, with
your full name, company name, title, telephone number, company e-mail
address, company website, city, state and country.

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    Contact:
    Chiara Carella
    Corporate Communications - Europe
    P: + 44 (0) 207-3438314
    M: + 44 (0) 7533017689
    E: chiara.carella@frost.com

www.frost.com

Chiara Carella, Corporate Communications - Europe of Frost & Sullivan, + 44 (0) 207-3438314, mobile, +44 (0) 7533017689, chiara.carella at frost.com