MOUNTAIN VIEW, California –The offshore oil and gas industry remains one of the fastest-growing end-users of the satellite communications market despite the disruptions caused by unstable oil prices. A bulk of the drilling and production vessels located offshore are currently manned and operational, requiring satellite communications for monitoring and personnel communication.
An analysis by Frost & Sullivan estimates the offshore oil and gas satellite communications market-spend will reach $459.9 million by 2020, up from $357.2 million in 2014. The report says North America will account for a significant share of these investments owing to substantial offshore oil and gas supply and strict safety regulations.
“Even during a period of low margins for oil and gas companies, their consumption of satellite communications services and hardware is stronger than the average adoption across industries,” said Frost & Sullivan Space Communications Industry Analyst Peter Finalle. “Decreased oil prices do not affect the communication needs of active offshore ships and vessels that are inaccessible by traditional terrestrial technologies. Moreover, no competing technology has proven as effective at long distances away from cellular and microwave towers. The improving efficiency of transponders and bandwidth increases the associated value of satellite technology and further accelerates revenues.”
While established market participants will thrive, the report points out location and cost constraints will heighten the barriers to market entry for new vendors. Along with aggressive competition, the high price for satellite services will also dampen profits.
“The market will bounce back in 2016 and 2017, as the effects of decreased oil prices settle and the exploration of oil and gas gains pace,” noted Finalle. “However, market share will remain hard-fought for by both new and existing operators in the global offshore oil and gas satellite communications space.”
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