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Oil and gas production from the Southeast and East Asia region is estimated to decline by nearly 20% from 2017 until 2025, as new projects are not able to compensate for the natural decline in production of mature fields. However, China’s production is expected to decrease the least, supported by the stable output from the giant Changqing field and several ramping up projects, including Longmaxi Shale. This article assesses the Southeast and East Asia status and outlook, illustrated by the three key drivers: production, exploration success and spending.
Figure 1 depicts the total production for the Southeast and East Asia region from 2010 to 2025, split by country. Production in the region is decreasing since 2015, as many of the projects are mature and have been producing for decades. Ramping up projects in the early development phase were able to offset mature decline in the last couple of years, but in the long-term, total supply from Southeast and East Asia is set to decline to around 10.4 million boe/d by 2025, compared to 13.1 million boe/d in 2017. More than half of the production is coming from China, with Indonesia and Malaysia making up another 30% of the oil and gas supply. The Changqing field in China contributes almost 10% to the region’s production, and is expected to maintain stable output of around 1 million boe/d per year over the next five years. In addition, the Chinese production will benefit from growing volumes from the second phase of the Hetianhe gas field, as well as Longmaxi shale gas developments in the Sichuan Basin. Production from the Southeast Asia is expected to decline more steeply in the medium to long term, with decreasing volumes from projects such the Shell-operated Gumusut-Kakap, and the ExxonMobil-operated Banyu Urip (Cepu field), expected to reach full capacity already this year.
Figure 2 shows the discovered volumes for Southeast and East Asia from 2000 to 2017. Shale and tight oil are not included. The best year for exploration in the region was 2000 when the giant Abadi field was discovered offshore Indonesia, and the Sulige gas field was discovered in China. In 2009, PetroChina discovered the Anyue gas field with an estimated 1.7 billion boe in reserves. In 2012, Petronas made a large discovery, the Kasawari gas-condensate field, in Block SK316 offshore Sarawak, and ExxonMobil discovered Ca Voi Xanh (Blue Whale) in Vietnam. Cumulatively, these two discoveries added around 1 billion boe in reserves. 2017 has been the worst year in terms of added reserves with only 300 million boe discovered. Last year’s discoveries included Yuedong 30-1-1 in the South China Sea, Parang oil field offshore Indonesia, and Pyi Thit gas field offshore Myanmar. Most of the recent key discoveries, with the exception of the Anyue field, are still unsanctioned, and the FID on the Abadi field is not expected before the beginning of the next decade.
Figure 3 shows the total spending in Southeast and East Asia from 2010 to 2025. Spending levels reached $160 billion in 2013 and fell sharply during 2015-2016 to a level of just $101 billion. To a large extent the drop was driven by decreased spending in China, where investments were cut by 35%. The fall in oil price led to decreased infill drilling levels in the country and projects such as Changqing, Shengli, and Daqing were especially affected. Fields in Indonesia and Malaysia also experienced cuts in expenditures. In such a way, spending was decreased by nearly 60% on Indonesian Peciko field and Malaysian Gumusut-Kakap. It is currently expected that total investments in the region are already on an increasing trend. The total spending is anticipated to stand at $121 billion by 2020, driven by recovery of drilling in China and some growth in Indonesia from already sanctioned fields. Nevertheless, total investments are not expected to reach 2014 levels even by 2025.
Production in Southeast and East Asia has been declining since 2015 and Rystad Energy expects this trend to continue for the rest of the decade. Current discoveries waiting in the pipeline to be developed are not enough to offset the declining trend in the region. Thus, the future of oil and gas production in the region is highly dependent on the exploration success achieved.