While pipeline construction requires a substantial capital expenditure, it is fast becoming the preferred mode of transportation of oil and gas resources when there is a long-term commitment between trade partners. As a result, the global oil and gas trunk pipeline length is set to increase by over 100,000km by 2015.
The majority of oil and gas transportation occurs through tankers and pipelines. Oil and gas companies tend to prefer pipeline trade over trade through tankers, as pipeline trade requires fewer operational procedures and low operating expenditure.
High consuming nations will go to new lengths to meet oil and gas demand
GlobalData estimates that the global oil and gas trunk pipeline length will increase by 104,884.2km during 2011–2015, the top five countries in terms of planned pipeline length addition will account for around half of all planned additions globally; namely Russia, India, the US, China and Canada.
Russia plans to develop pipeline infrastructure to target Asian markets such as Korea and China for oil and gas exports, while China plans to add pipelines to secure its oil and gas supplies from source countries such as Myanmar and Russia.
However, India, the US and Canada mainly plan to develop their pipeline infrastructure for transportation reasons. While India is focused on the internal transportation of gas and petroleum products, the US and Canada seek to transport gas and petroleum products from resource-rich to resource-deficient regions across their large geographical areas.
The successful development of unconventional energy sources in North America has led to new pipeline construction projects in the region. Due to the successful development of oil sands in Canada and shale gas fields in the US, the countries are better equipped to meet the growing regional demand across North America. This will, of course, depend on the construction of new pipelines or upgrades to the capacity increment of existing pipelines.
Top countries step on the gas in terms of global pipeline addition plans
Global natural gas production is expected to increase at an average annual growth rate (AAGR) of 2.7% during 2011–2015. During the same period, global oil production is expected to increase at an AAGR of 1.0%. The increase in oil and gas production will naturally lead to the expansion of the existing pipeline network in order to transport the oil and gas production to various demand centers. Due to a higher rate of gas production, gas pipelines will be responsible for 75% of the total global planned pipeline length addition during 2011–2015.
The majority of global pipeline length additions will be associated with state-owned companies. Of the top 10 companies in terms of associated pipeline length, only two companies are privately-owned. This emphasizes the importance of pipeline projects for governments across the world.