Market Trends of Hazardous Area Equipment Industry
Oil and Gas End-user Industry Segment is Expected to Hold Significant Market Share
- In the oil and gas industry, explosion proofing has two requirements: equipment must be manufactured to the appropriate standards and installed and maintained in accordance with additional standards. Also, oil and gas employees are frequently required to work in dangerous environments. Safety is significant when flammable liquids, gases, vapors, or combustible dust are present in substantial amounts. Such requirements are creating increasing demand for hazardous area equipment in the coming years.
- The market is witnessing various innovations to assist customers in the daily construction, operation, optimization, and enhancement of their assets and provide alternative electrical solutions in more hazardous situations. Moreover, the discovery of oil reserves and upcoming investments in the exploration processes is expected to drive the demand for hazardous area equipment. For instance, the International Energy Agency said that by 2040, the world's demand for oil will go up by 21%, making it the source of 35% of all energy, and the demand for natural gas will go up by 31%, making it the source of 17% of all energy.
- Additionally, the increasing demand for crude oil and finished oils, including heating oil and diesel fuel in the automobile, energy, machinery manufacturing, electricity, chemicals, and metallurgy sectors has further boosted the need for more oil and gas exploration processes, indirectly driving the demand for hazardous area equipment. The demand for crude oil (including biofuels) in 2022 globally amounted to approximately 99.57 million barrels per day, and it is forecasted to increase to 101.89 million barrels per day in 2023.
- Hazardous locations are primarily found in the oil and gas industry, as areas with limited presence of combustible gas are high. According to GECF, in December 2022, natural gas consumption in China amounted to 33.5 billion cubic meters (bcm). In addition, according to the IEA, the country is expected to account for 280 billion cubic meters of global natural gas demand by 2040. It also has the potential to overtake the United States as the ultimate oil consumer by 2030, with 13 million barrels per day net imports by 2040. Such expansion in the oil and gas industries may further propel the market's growth.
- The government's Oil Ministry's earlier announcement related to the spending of around USD 118 billion in the oil and gas exploration and setting up of natural gas infrastructure in India over the next few years, which USD 58 billion would be funded in oil and gas exploration and exhibition, by 2023 while USD 60 billion will be put in the development of natural gas infrastructure, such as pipelines, import terminals, and city gas distribution networks by 2024. Thus, the market is anticipated to witness significant growth.
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Asia-Pacific is Expected to Hold Significant Market Share
- China is one of the significant producers and exporters of manufacturing equipment and machine tools worldwide. The surge in manufacturing activities over the last decade has increased the production of equipment and tools. Therefore, this growth is impacting the rate of adoption of explosion-proof equipment. According to Semiconductor Equipment and Materials International, in 2022, the sales revenue from semiconductor equipment in China reached almost CNY 1.38 trillion (USD 0.19 trillion).
- The increasing adoption of automation in manufacturing procedures is expected to propel the demand for explosion-proof solutions. At many industrial and manufacturing plants, personnel periodically perform field inspections by patrolling along defined routes and checking field devices at specific points to keep facilities and equipment safe and in good working order.
- India is frequently investing in the studied market growth due to the increase of industrialization and the development of Mining industries in the country. Additionally, India's mining sector has expanded due to a new government that is pro-industry. According to MOSPI, at the end of fiscal year 2022, production of the mining industry across India increased by about 12%.
- Further, according to IBEF, the government plans to monetize assets worth INR 28,727 crore (USD 3.68 billion) in the mining sector over 2022-25. Additionally, in February 2023, JSW Group announced the construction of a steel plant in Andhra Pradesh's YSR Kadapa district with an investment of INR 8,800 crore (USD 1 billion). Such developments in the metals and mines plants may further create demand in the studied market.
- Japan is one of the significant manufacturers of automobiles and electronic equipment, and the demand for these products is increasing rapidly worldwide. This factor has led to the rise in construction and upgrading manufacturing facilities to meet global demand and provide new and innovative products. To facilitate this, machinery is required to carry out the activities, thus increasing the growth of explosion-proof equipment in the manufacturing sector.
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