October 9, 2016
Authors: Olga Kerimova, Senior Analyst, and Veronika Akuliniseva, Analyst, Rystad Energy
Publisher: PESGB Newsletter, October Edition
Long term production potential from the Southeast Asian region is dependent on more discoveries and faster sanctioning; at the current activity levels new projects are not able to compensate for the natural decline in production of mature fields in the region. This article assesses the Southeast Asia status and outlook, illustrated by the three key drivers: production, exploration success and spending.
Figure 1 depicts the total production for the Southeast Asia region from 2010 to 2020, split by countries. Production in the region has been steadily decreasing since 2010, since more than half of the projects are mature and have been producing for decades. Gas production is dominant in the region, accounting for 57% of total production. More than half of the production is coming from Indonesia and Malaysia, Indonesia being the biggest contributor to the oil and gas supply. Two biggest projects, in terms of production, are the LNG projects Bontang and Tangguh. Bontang has been operating since 1977 and Tangguh since 2009, both operated by BP. These LNG projects supply gas to the East Asian LNG market. Most projects currently under development are in Malaysia: Kebabangan, redevelopment of Kinabalu and Malikai being the biggest in terms of potential future production. Majors dominate the region, followed by the national state-owned companies.
Figure 2 shows the discovered volumes for Southeast Asia from 2000 to July 2016. The best year for exploration in the region was 2000 when the giant Abadi field was discovered in offshore Indonesia. Other notable discoveries include Su Tu Den (Black Lion) in offshore Vietnam, Exxon Mobil-operated Banyu Urip (2001), Malaysia’s deepwater Kikeh field discovered in 2002 and Gumusut-Kakap fields discovered in 2003/2004. In 2012, Petronas made a large discovery, the Kasawari gas-condensate field, in Block SK316 offshore Sarawak. In 2014, five gas discoveries (Larak, Gorek, Teja, Legundi and Bakong) were made in Block SK408, and this year, two discoveries were made in the same block, Jerun and Jeremin fields, with combined estimated resources of around 300 million boe. Most of the recent discoveries are still unsanctioned, along with the Abadi field where the FID is not expected before 2021.
Figure 3 shows the total spending in Southeast Asia from 2010 to 2020. Spending levels have increased significantly from $49 billion in 2010, peaking at almost $68 billion in 2014, followed by a significant drop in 2015. Capital expenditure (Capex) reached a high of around $35 billion in 2014, decreasing 22% in 2015, and is expected to fall an additional 21% this year. Future growth in capex is expected mainly from the development of the Tangguh Expansion Project (FID approved in July 2016), the Kasawari field, which is expected to start producing around 2022, as well as the Block B gas project in offshore Vietnam, which was approved for development in April this year. The operating costs (Opex) are expected to remain around $23-27 billion per year, accounting for inflation, consistent with the production trend shown in Figure 1.
Production in Southeast Asia has been declining since 2012 and Rystad Energy expects this trend to continue for the rest of this decade. However, the increase in the spending after 2018 on projects under development and on the new discoveries will bring more production after 2020. Still, more discoveries and faster sanctioning is needed to offset the production decline in the already producing fields.
Contact: Olga Kerimova, Analyst
Phone: +47 24 00 42 00
Contact: Veronika Akulinitseva, Analyst
Phone: +47 24 00 42 00
About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.
Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro), Singapore as well as the UAE (Dubai).