Digitization is the fuel (no pun intended) that’s going to propel the oil and gas industry into its foreseeable future. The industry is counting on digitization to address its upstream, downstream and mid-stream challenges. With highly volatile prices, mounting threat from electric vehicles and increasingly stringent environmental regulations, the oil and gas industry faces massive hurdles such as finding ways to reduce costs, optimizing efficiency of its industrial base assets and improving its global environmental footprint.
Draup performed a comprehensive study to understand the digitization efforts of the Oil and Gas industry. Across the Oil and Gas space, ER&D spend is estimated to be around $50 billion and is expected to grow at a CAGR of 3.5% up until 2021. North America accounts for 45% of the total R&D spend with another 49% being distributed across Europe. Analytics, automation and IIoT are the primary digital spend segments.
Our efforts to dissect ER&D spends by top OEMs revealed that spending is highly consolidated among the top 5 manufacturers namely PetroChina, Royal Dutch Shell, Gazprom, ExxonMobil, and Total S.A. They have a combined ER&D spend of $18 billion. The industry is highly fragmented with the top 5 constituting nearly 33 percent while the next 10 players accounting for ~27 percent of the spend.