Refinery maintenance prices are projected to continue rising as the price of oil rebounds
Los Angeles, CA (PRWEB) March 20, 2015
The oil and gas refinery maintenance services market has a relatively weak buyer power score of 2.2 out of 5, indicating poor negotiation conditions for buyers. First of all, tightening environmental regulations have set out to reduce toxic emissions from refineries, in turn necessitating the installation of various equipment and tools as a part of maintenance, explains IBISWorld research analyst Agiimaa Kruchkin. “As a result, demand has strengthened, driving price growth.” Furthermore, the domestic production of oil and natural gas has skyrocketed during the period, fueling demand and boosting service prices. The recent oversupply of crude oil has sent its world price plummeting, though, thereby mitigating growth in maintenance service rates to some extent.
“Buyer power is also reduced due to a lack of viable substitute services,” says Kruchkin. “The only alternative to refinery maintenance involves setting up an in-house maintenance department, which is usually uneconomical.” On a related note, refinery maintenance solutions feature a significant level of specialization because there is no similarity between facilities, even within a single company. As a result, buyers require a highly customized approach, which impedes buyer's leverage in price negotiations. In addition, switching costs are high because services are typically procured under multiyear contracts, further challenging buyers.
Moreover, moderate volatility in service prices makes it difficult to budget for maintenance services, thereby impairing buyer power. At the same time, the majority of refinery maintenance projects are ongoing and, therefore, procured via multiyear contracts. Consequently, buyers benefit from locking in rates under long-term agreements. Current vendors include Turner Industries, Zachry Group, AECOM and Fluor Corp. For more information, visit IBISWorld’s Oil & Gas Refinery Maintenance Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of oil and gas refinery maintenance services. Suppliers of these services provide ongoing maintenance for oil refineries and natural gas processing plants to ensure operational efficiency and reduce downtime. Services are commonly purchased on a contract basis and include preventive maintenance, rehabilitation, equipment repairs and replacements. Vendors also provide maintenance services aimed at energy conservation and reliability improvements, as well as compliance with safety and environmental requirements. This report does not cover refinery construction services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.