22-Aug-2013 - Frost & Sullivan

Turkey: Rising demand for oil and gas will fuel automation and control systems

A robust Turkish economy, aided by a stable political establishment, is set to increase investments in the oil and gas industry and boost automation and control solutions (ACS) market growth. Compliance with new regulations governing oil and gas products is also poised to promote fresh ACS investments from this year on.

New analysis from Frost & Sullivan finds that the market generated revenues of $118.4 million in 2012 and estimates this to reach $183.2 million in 2016. The research covers distributed control systems (DCS), programmable logic controllers (PLC), safety instrumented system (SIS), supervisory control and data acquisition (SCADA), manufacturing execution system (MES), and human machine interface (HMI). End-user segmentation in the oil and gas industry covers upstream (oil and gas exploration and production), midstream (oil and gas transportation and distribution), and downstream (oil and gas refining).

“A key factor driving ACS investments is the steadily escalating demand for oil and gas,” noted Frost & Sullivan’s Industrial Automation and Process Control Senior Research Analyst Karthik Sundaram. “The lack of sufficient domestic production is coercing the Turkish Government to encourage new investments and increase subsidies to local companies for greater domestic production.”

The growth of the oil and gas industry in Turkey is expected to be uniform across all major end-user segments, including upstream, midstream, and downstream with many greenfield projects being under taken.

“The Turkish Government is determined to sustain oil and gas exploration; investments in upstream exploration activities will be spurred by both government and foreign investors,” remarked Sundaram. “In the case of midstream operations, newer investments are expected primarily from foreign investors as there is a growing emphasis on finding an efficient alternative to Russian gas supply monopoly in Europe.”

The downstream segment is poised to benefit from two new refining companies that are expected to begin operations during the forecast period. While these are promising signs, high interest rates and the volatility of oil and gas prices could affect investor sentiment toward the industry. This, together with high taxation, could eventually lead to lower ACS investments to balance margins,thereby impacting the growth of the ACS market.

“Sales and service support will be instrumental for automation vendors to effectively compete and gain acceptance from Turkish oil and gas companies,” advised Sundaram. “Improved product functionality will also lay the foundation for sustained market development.”

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