Market Trends of Middle East And Africa Industrial Automation Industry
Penetration in Oil & Gas Industry to Grow Significantly
- In the oil and gas industry, value chain automation is fast becoming essential at exploration sites and production/processing facilities. As oil production/processing often involves the use of different chemicals that can harm humans, automation is a high life saver and is increasingly used in oil production plants to reduce such instances. Furthermore, automation helps companies enhance operational efficiency and production capabilities, driving adoption.
- Countries in the Middle East furnish and export a significant amount of crude oil globally. The area commands considerable demand for industrial sensors used for various applications. According to Baker Hughes rig count, the average rig count in the Middle East increased significantly in 2022 compared to 2021. In 2022, the average number of rigs was 308, an increase of 16.3% compared to 2021.
- The region constantly discovers new oil and gas wells while old and underutilized ones are revitalizing. For instance, the government-owned Abu Dhabi National Oil Co. recently announced a significant rig fleet expansion program expected to add dozens of rigs by 2025. Moreover, ADNOC announced in 2022 that natural gas resources had been discovered offshore the Abu Dhabi Emirates. This is the country's first discovery from its offshore exploration concessions, demonstrating the success of ADNOC's block bid rounds. This exploration discovered 1.5 to 2 trillion standard cubic feet (TSCF) of raw gas.
- According to OPEC, Saudi Arabia holds approximately 17% of the world's proven petroleum reserves. The oil and gas industry contributed roughly 50% of the GDP and 70% of export earnings. According to the Energy Institute, in 2022, oil production in Saudi Arabia was about 12,136 thousand barrels per day. Hence, the country's significant presence in the oil and gas industry will continue contributing to the region's market growth.
- Furthermore, according to a January 2022 report by Arab Petroleum Investments Corporation, energy investments in the Middle East and North Africa are anticipated to increase by 9% over the next five years to more than USD 879 billion as energy exporters increase spending amid higher oil revenue. As automation plays a crucial role in the oil and gas sector, such trends are anticipated to favor the studied market's growth during the forecast period.
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Saudi Arabia to Experience Significant Market Growth
- The market in Saudi Arabia is majorly driven by increasing investments in the oil and gas industry value chain. Oil and gas development is transforming other industries, including energy solutions. As a result, like most Middle Eastern countries, Saudi Arabia's economy typically depends on the oil and petrochemical industry; thereby, investments in advanced solutions to maintain the growth of the industries are anticipated to remain high, creating a favorable outlook for the growth of the studied market.
- According to Invest Saudi, agriculture and food processing are among the fastest-growing industries in Saudi Arabia. As the country lacks sufficient arable land, the penetration of advanced farming techniques and production technologies is quickly gaining prominence in the country as the investments by public and private firms are growing significantly. For instance, in June 2023, Saudi's Ministry of Industry and Mineral Resources announced that the government is aiming to attract investments worth USD 20 billion in the food industry by 2035.
- Furthermore, with the strengthening of oil prices, the country is expected to invest more in the non-oil sector, facilitating the rapid growth of the manufacturing and e-commerce sectors. For instance, in February 2023, the Saudi Authority for Industrial Cities and Technology Zones signed a deal to build 14 new high-tech warehouses in the city of Jeddah that will be operated based on a public-private sector partnership model. Owing to such initiatives, the adoption of automation solutions such as automated material handling solutions is expected to witness a higher demand over the forecast period.
- In recent years, owing to Saudi Vision 2030, the plan launched recently to reduce the country's dependence on oil. As a result, sectors such as manufacturing, e-commerce, and logistics sectors are witnessing significant growth. For instance, according to Saudi Arabia's General Authority for Statistics, the country's GDP from Manufacturing increased to SAR 91,760 million (USD 24,462.3 million) in the first quarter of 2023 from SAR 89,976 million (USD 23,986.75 million) in the fourth quarter of 2022. Such trends are anticipated to favor the studied market's growth during the forecast period.
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