Southeast Asia’s Oil And Gas Output May Never Recover To Pre-COVID Levels

2 years ago 401

The Covid-19 pandemic has marked the extremity of an epoch for Southeast Asia’s combined lipid and state production, pushing the region’s output successful 2021 to beneath 5 cardinal barrels of lipid equivalent per time (boepd) for the archetypal clip since 1998, a threshold that is not apt to beryllium exceeded again successful the aboriginal contempt caller task start-ups successful coming years, a Rystad Energy investigation shows.

Daily mean hydrocarbon accumulation tumbled to 4.86 cardinal boepd successful 2021, down from 5.06 cardinal boepd successful 2020, and a monolithic 12% driblet compared to the pre-pandemic volumes of 5.5 cardinal boepd successful 2019, Rystad Energy information shows.

Operators person struggled to regain accumulation losses triggered by the pandemic arsenic operators slowed down enactment levels amid an unprecedented disruption successful lipid markets. The diminution is projected to proceed into the mediate of the decade. Although volumes volition stay unchangeable successful 2022, accumulation volition driblet an further 10% by 2025 to astir 4.3 cardinal boepd versus existent levels.

“Liquids accumulation successful Southeast Asia has been connected the diminution for astir 20 years owed to a deficiency of discoveries and task sanctioning activities successful the region. While caller authorities incentives whitethorn help, the portion looks acceptable to acquisition declining accumulation levels good into the future,” says Prateek Pandey, upstream vice president

By contrast, earthy state accumulation successful the portion stayed dependable betwixt 2009 and 2019, astatine astir 20.8 cardinal cubic feet per time (Bcfd). Despite expectations of a emergence successful state income measurement that would antagonistic the 8% autumn successful accumulation successful 2020, volumes are expected to beryllium down astir 2% this twelvemonth compared to 2020, astatine astir 19 Bcfd. This is chiefly owed to falling accumulation astatine mature bequest projects including Mahakam, MLNG Dua and MLNG Satu PSCs, Yetagun.

The stock of measurement from projects nether improvement and existing commercialized discoveries are important and bespeak the region’s timely execution of projects. Several projects were successfully brought onstream successful 2021, including the highly anticipated Rotan field, utilizing PFLNG Dua, which started successful March, making Petronas the lone relation globally to nutrient LNG from 2 floating facilities. In Indonesia, Eni completed a timely development, with Merakes achieving its archetypal state accumulation successful April 2021

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However, contempt these successes, Southeast Asia is inactive plagued by delays and stalled projects. In Indonesia, a betterment successful state accumulation has been further delayed aft the 2 important developments -Tangguh LNG T3 and Jambaran Tiung-Biru Unitisation (JTB) - were postponed until 2022.

What the aboriginal holds

For astir of Southeast Asia, implicit 60% of output comes from mature blocks – fields producing much than 50% of its resource. Volumes from specified blocks are apt to spot a accordant diminution implicit the adjacent fewer years, with an estimated 60% of accumulation by 2030 apt coming from projects presently astatine the pre-FID (final concern decision) stage. Consequently, the driving unit down the region’s upstream outlook volition beryllium the sanctioning of caller developments.

2020 was a nightmare twelvemonth for determination sanctioning activity, with lone astir 300 cardinal barrels of lipid equivalent (boe) of resources from six assets reaching FIDs. As operators tried to determination guardant successful 2021, the portion has seen much than 10 projects unafraid FIDs, with astir 750 cardinal boe of reserves and immoderate $3 cardinal successful greenfield investment, with Malaysia accounting for 85% of the total.

Sanctioning activities successful 2022 are apt to stay astatine akin levels, with FIDs planned connected astir 800 cardinal boe of resources successful the region, of which 60% are successful Indonesia and implicit 35% successful Malaysia. Projects operated by majors and NOCs are apt to predominate successful Malaysia, whereas determination players and E&P companies volition chiefly thrust Indonesian developments.

However, planned FID projects successful 2022 whitethorn inactive look challenges successful securing the last approval. Indonesia’s home state terms regularisation remains a interest for astir ample state developments successful the pipeline. Although incentives are being discussed for blocks specified arsenic Kasuri, it is inactive 1 of the factors that could further hold progress. The planned developments from accumulation sharing contracts (PSC) owed for existent declaration expiry successful the adjacent word are besides astatine hazard unless big state governments initiate aboriginal discussions connected imaginable extensions.

Southeast Asia is improbable to spot a important summation successful spending successful 2022, with investments projected to beryllium successful the scope of $15 cardinal to $20 cardinal crossed the year. Investments volition apt beryllium driven by accrued drilling enactment successful mature blocks successful Indonesia and Thailand, arsenic NOCs instrumentality the reins and absorption connected top-producing blocks.

Around 360 cardinal boe successful resources person been discovered astatine 8 fields arsenic of November 2021, surpassing 2020 volumes by 40%. About 78% of full discovered resources this twelvemonth successful Southeast Asia are state oregon state condensate, portion the remainder is oil. About 84% travel from shallow waters, with astir 86% astatine NOC-operated blocks. In enactment with the trend, implicit 90% of measurement successful the portion successful 2021 has been discovered successful the Miocene-Clastic formation.

By Rystad Energy

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