SE Asia Faces Wave of Upstream FID: Rystad
Fifty oil and gas fields in southeast Asia, with combined resources of 4bn barrels of oil equivalent, will likely be approved for development during 2018-2020 and will require $28bn of capex from final investment decision (FID) to first production, Rystad Energy said January 23.
The $28bn is for greenfield opportunities available to 2020, while brownfield, maintenance and infill drilling activities at existing projects will consume more funds.
Since several of the 50 projects are in later phases of earlier developments, with the largest infrastructure already in place, project scopes in the $28bn pie might not be as large, or the competition as intense, as service providers would prefer, Rystad Energy argue. In Indonesia, for instance, Senoro Phase 2 will feed into an already installed LNG plant, and further development at Bukit Tua will rely on existing processing facilities.
Sapura Energy, operating four of the 50 fields on the list, expects engineering, procurement, construction and installation (EPCI) contracts to remain within the company. “Competition could also be limited by the fact some countries in the region have local content policies favouring domestic service providers,” said Readul Islam, research analyst at Rystad Energy.
With 19 fields, Indonesia has the largest count in the forecast. However, Malaysia dominates the tallies for both the resources developed (37%) and required capex (42%).
In Malaysia, Rystad Energy expects sanction of Mubadala Petroleum’s Pegaga field during this quarter — potentially the largest regional individual field FID of 2018. Sapura Energy will try to progress some of the smaller fields at offshore block SK408 during the year, it said.
According to Islam projects such as SK408’s Jerun field will start to shine towards the end of the period of this study. “After the 2018 elections, whichever partner Petronas brings in will need some time to properly study the CO2 content issues before finally approving the biggest prize in our time horizon — Kasawari.”
Rystad Energy predicts that FIDs over each of the next three years will be heavily gas weighted; gas makes up 85% of the resources reaching FID over the full period. The largest gas kick in 2018 will come from Vietnam, with the lion’s share coming from the expected approval of the Block B project, it stated.
Most of the gas resources to be developed in Indonesia and Malaysia will be supplied to existing LNG plants. Brunei, Indonesia and Malaysia have long-running LNG projects where the new sources of supply will ensure these projects maintain their long-term commitments.
“Strong economic growth has led to burgeoning domestic gas demand throughout the region. The resulting uptick in local gas prices as well as the pollution profile of the fuel compared to alternatives means both operators and governments are incentivized to push natural gas projects,” commented Islam. “Countries such as Myanmar, with offshore gas discoveries and a still emerging local gas market, look set for an export boom.”