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With rising inflation and an increasing capital cost borrowing environment posing challenges for upcoming oil and gas projects, the overall oil and gas industry’s disclosed contract value saw a significant quarter-on-quarter (QoQ) decrease of 48% in Q1 2023, reveals GlobalData, a data and analytics company 

GlobalData’s latest report, 'Oil and Gas Industry Contracts Analytics by Sector (Upstream, Midstream and Downstream), Region, Planned and Awarded Contracts and Top Contractors, Q1 2023', shows that the overall contract value decreased from US$64.9bn in Q4 2022 to US$34.01bn in Q1 2023. The contract volume also decreased from 1,623 in Q4 2022 to 1,440 in Q1 2023.

Pritam Kad, oil and gas analyst at GlobalData, said, “It appears the contract value momentum has slowed down due to high interest rates and a rising inflationary environment in the major economies. This could have potentially resulted in fewer high-value contracts during the quarter in the oil and gas space.”

Operation and maintenance (O&M) segment represented 57% of the total contracts in Q1 2023, followed by procurement scope with 17%, and contracts with multiple scopes, such as construction, design and engineering, installation, O&M, and procurement, which accounted for 14%.

Some of the notable contracts during the quarter include a 15-year contract extension worth approximately US$5.3bn secured by Yinson Holdings subsidiaries for charter and operation and maintenance (O&M) services of Agogo Floating, Production, Storage, and Offloading (FPSO) in Angola; and a five-year contract worth approximately US$2.6bn won by ADNOC Logistics & Services for integrated logistics services for ADNOC Offshore in the United Arab Emirates (UAE).

The other major contract was DL E&C’s US$1.6bn contract with Hyundai Engineering & Construction-led consortium comprising Hyundai Engineering and Lotte Engineering & Construction for the construction of Thermal Crude to Chemicals (TC2C) facilities and an interconnection package for S-Oil’s Shaheen ethylene and propylene project in Ulsan, South Korea.