Europe Christmas Tree Market - Growth, Trends, and Forecasts (2023-2028)

The European Christmas tree market is expected to register a CAGR of over 3% during the forecast period.

The market was negatively impacted by COVID-19 in 2020. Presently, the market has reached pre-pandemic levels.

Key Highlights

• Over the medium term, the increasing investments and development of natural gas reserves are expected to drive the market's growth.
• On the other hand, the increasing adoption of renewable energy is expected to hamper the growth of the market during the forecast period.
• Nevertheless, increasing investments in deep-water and ultra-deep-water drilling activities across the region will likely create lucrative growth opportunities for the European Christmas tree market in the forecast period.
• Norway dominates the market and will likely witness the highest CAGR during the forecast period. This growth is attributed to the increasing investments and supportive government policies in the oil and gas industry.

Europe Christmas Tree Market Trends

Horizontal Tree to Dominate the Market

• Horizontal Xmas Trees (HXT) are exclusively used in subsea operations, and the valves of horizontal Xmas trees are located on the lateral sides, allowing easy well intervention and tubing recovery.
• On an HXT, access to the annulus (between the production tubing and casing) is incorporated into the tree design and controlled by gate valves instead of plugs, which allows operations with a mono-bore, less-complex riser, or landing string.
• In 2021, crude oil reserves in Europe stood at 11,552 million barrels, representing a decline of 6.8% compared to 2020 levels. Among European countries, Norway recorded the highest proven crude oil reserves (7,525 million barrels), followed by the United Kingdom (2,000 million barrels) and Denmark (428 million barrels).
• Unlike Vertical X-mas Tree (VXT), HXTs typically require a rig to run the Blowout Preventer (BOP) stack and recover completion during replacement operations. Typical costs range from USD 15-60 million, exclusive of mobilization/demobilization costs.
• However, HXT systems offer the lowest initial CAPEX and provide a universal design for operational efficiency in multiple fields. Additionally, these systems are especially suited for subsea systems, which require frequent interventions, reducing the cost and complexity of well interventions.
• HXTs offer several advantages in subsea environments, due to which they are preferred to VXTs for deep-sea applications. HXTs have a significantly larger bore of up to 7”, which allows larger outer diameter (OD) tubular to be run into the wellbore without removing the tree.
• Owing to the above points, the advantages of horizontal Xmas trees over vertical Xmas trees are expected to drive the segment in the coming years.

Norway to Dominate the Market

• As of 2021, Norway is the world's third-largest exporter of natural gas, behind Russia and Qatar. The country has supplied 20-25% of the EU and United Kingdom's gas demand. Nearly all oil and gas produced on the Norwegian shelf are exported and combined, due to which oil and gas exceed half of the total value of Norwegian exports of goods. This makes oil and gas the most important export commodities in the Norwegian economy.
• In 2021, Norway's natural gas production amounted to 116,700 million standard cubic meters, up by 0.4% compared to the previous year.
• A total of 18 new oil discoveries were made in 2021, out of which 12 were in the North Sea, three in the Norwegian Sea, and three in the Barents Sea. The discoveries have a preliminary total estimate of 85 million standard cubic meters of recoverable oil equivalents. The most significant discoveries are 6507/4-2 S (Dvalin Nord) in the Norwegian Sea, 31/2-22 S (Blasto), 25/8-20 S, and 25/8-20 B (Prince/King) in the North Sea. These discoveries are likely to promulgate the growth of the market since all the discoveries were made offshore, which require subsea production systems such as subsea trees.
• The oil and gas sector is responsible for about one-fifth of the country's productive capital investments. As per the Norwegian Oil and Gas Association, significant investments were made in exploration, field development, transport infrastructure, and onshore facilities in 2020. Also, in 2021, the investments, excluding exploration, totaled around NOK 147 billion. ​
• Four new fields came onstream in 2021: Martin Linge, Duva, Solveig in the North Sea, and Ærfugl Nord in the Norwegian Sea. In October 2021, production from Yme started again after a field redevelopment. As of December 2021, six field developments were ongoing: four in the North Sea, one in the Norwegian Sea, and one in the Barents Sea.
• Therefore, the growing demand for natural gas and increasing investments in the oil and gas industry are expected to drive the segment in the coming years.

Europe Christmas Tree Market Competitor Analysis

The Europe Christmas tree market is moderately fragmented in nature. Some of the major players in the market (in no particular order) include TechnipFMC PLC, Baker Hughes Company, Schlumberger Limited, Aker Solutions ASA, and Worldwide Oilfield Machine.

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