Oilfield service providers have shown increasingly strong interest in projects outside of the upstream oil and gas sector in recent years, and the trend is likely to gain momentum, according to Norway’s Rystad Energy.
In a statement dated October 29, the consultancy noted that non-upstream operations had come to account for an increasingly large share of major oilfield service providers’ portfolios. It explained that non-upstream projects had made up fully 27% of service companies’ revenues in 2018, up from 22% in 2014.
This shift away from upstream projects is partly the result of efforts to expand the use of wind, solar, and geothermal energy in the long term, Rystad said. Additionally, it noted that service providers were keen to diversify in the face of the massive budget cuts made by many upstream operators in recent years.
“[Beyond] these obvious motivators, the shift is also a sign of something greater – namely, the energy transition,” said Audun Martinsen, Rystad’s head of oilfield services research. “Suppliers have begun embarking on a journey towards becoming broader energy service companies, sailing away from the oilfield services segment that propelled them in the past.”