Oil companies’ competitors are increasing their global market share, and so should they. As oil and gas equipment manufacturers and service providers in the U.S. adjust their business model because of the low price of oil, it’s time to pivot to global markets. The benefits to exporting are manifold: risk mitigation, competitive advantage, increased demand and improved profitability.

Companies that export have an easier time riding out fluctuations in the U.S. economy and are more likely to remain profitable during difficult economic periods.

On average, companies that export see faster sales growth and support more jobs than nonexporting firms. And this makes sense—more than 80% of the world’s purchasing power is located outside the U.S., offering an important and often untapped customer base for many American companies.

Additionally, when U.S. firms export, they often find buyers that respect the quality of American goods and services. Foreign firms also routinely cite the outstanding customer service they receive from American companies as well as the sound business practices that U.S. firms bring to the market.

Exporting is not just for large companies; it can benefit businesses of all sizes. In fact, small and medium-sized companies account for 98% of U.S. exporters. Most of these firms, however, export to only one market—usually Canada or Mexico. Expanding the export profile beyond these two regional markets is easier today than ever before. Technology and improved logistics allow companies to reach markets quicker and provide the nuanced solutions to customers’ demands.

Oil, gas export trends

The fundamental transformation in the oil and gas sector during the last seven years and the significant drop in the price of oil since October 2014 have altered the economics of carefully planned business development strategies for many companies. The headlines in the oil and gas sector talk about downsizing work forces, reigning in investments and focusing on less capital-intensive and low-cost production. For those companies that were banking on continued investment in the U.S. shale gas sector, the impacts have been particularly acute and painful.

Trade in oil and gas equipment reflects overall trends in the U.S. export profile: Equipment manufacturers, and by extension service providers, need to find new sources of demand growth in a low oil price environment. Looking at what is exported and where it is going is one way to prioritize business development destinations.

The U.S. is overall a net exporter of oil and gas equipment, but the gap between imports and exports is narrowing. This means that the U.S. is using more foreign-made equipment and sending less equipment to foreign countries. This is in large part due to the increase in oil and gas E&P activity in the U.S., but this trend is changing.

What is being exported and where
South Korea and China are the two main exporters of oil and gas equipment to the world by value. South Korea is a major manufacturer of oceangoing vessels; semisubmersible drilling and production platforms; and other equipment such as casing, line pipe and containers. China is a major exporter of parts for derricks, tankers and light oceangoing vessels as well as offshore drilling and production platforms. The U.S. ranks third among major exporters of high-end drilling equipment and derricks, most of which go to Canada and Mexico (two of the nation’s largest trading partners).

Major U.S. competitors for equipment in the global market tend to produce low-tech components and commoditized equipment. U.S. firms are known for cutting-edge technologies with high R&D costs with very few competitors. Those countries with developing shale gas operations, ultradeepwater plays and needs for EOR technology would benefit most from the types of equipment and services in which many U.S. companies specialize. South Korea and China may export more, but they cannot compete with what U.S. companies have to offer.

Recent trade statistics indicate that Saudi Arabia and Argentina are two major growth markets for U.S. sales of oil and gas equipment. Both Saudi Arabia and Argentina have significant shale resources that are in the formative stages of development. The shale gas and shale oil boom in the U.S. has given a significant head start to U.S. companies in the subsector.

Three of the largest overall importers of oil and gas equipment are Singapore, Colombia and Norway. Singapore is a major hub for oil and gas equipment sales to Southeast Asia and is consistently ranked as one of the top places in the world to conduct business.

The government of Colombia also is looking to have private firms develop its shale resources in addition to its expanding offshore sector. Norway is a well-established destination for oil and gas equipment, particularly for companies with harsh-environment oil rigs, LNG technology for transportation from remote locations and advanced environmental technology to reduce emissions.


Prioritizing top destinations for business development
The U.S. Department of Commerce’s International Trade Administration is committed to using its data analytics as well as its industry expertise and Foreign Commercial Service staff to provide exporters an honest assessment of opportunities in global markets.

To help meet this objective, the International Trade Administration released its “2015 Top Markets Report for Upstream Oil and Gas Equipment,” which evaluates 75 different markets using seven indicators and ranks each country’s oil and gas market to gauge U.S. export potential.

The top markets report methodology consists of both quantitative and qualitative factors, including a country’s distance from the U.S., the amount of equipment the country has historically imported from the U.S., the amount of equipment the country imports from other countries, the country’s resources, its planned upstream investments, its business climate and overall market access.

This assessment provides a list of top export destinations for U.S. upstream oil and gas equipment firms along with researched market intelligence and country facts.


The report includes detailed case studies on 10 different markets that can help U.S. exporters better understand market dynamics, challenges to export competitiveness and opportunities. The report this year highlights Australia, Brazil, Canada, China, Colombia, Ghana, Israel, Mexico, Norway and the United Arab Emirates.

The report also includes two countries to watch that were not captured in the methodology: Burma and Mozambique. Burma is added because of the change in sanctions and its focus on oil and gas development, and Mozambique because of the large offshore gas development occurring in the northern part of the country. The countries to watch are in transition because these
are developing markets. U.S. companies should look into business opportunities in these countries to gain the first mover advantage.

Advantages of exporting
During a difficult 2015, U.S. oil and gas equipment and service suppliers may find advantages through diversification
into foreign markets. But what businesses do in this price environment is a challenge to be met, and U.S. companies have a global reputation second to none. Foreign firms seek U.S. cutting-edge technology, rugged equipment, reliable services and on-time deliveries, and this reputation can be leveraged when working with foreign buyers.

Hopefully the top markets report becomes a tool for exporters to use when considering foreign markets as a means to expand business operations. While 2015 has been a challenging year for the upstream oil and gas sector, it also can be a year to think about selling a company’s products or services in new places. The International Trade Administration stands ready to assist companies in this effort.

Comments