close
close

Offshore gas ‘renaissance’ in Southeast Asia to unlock $100 billion by 2028

Offshore gas ‘renaissance’ in Southeast Asia to unlock 0 billion by 2028
Offshore gas ‘renaissance’ in Southeast Asia to unlock 0 billion by 2028

Offshore gas production in Southeast Asia is expected to unlock a potential of $100 billion, thanks to several planned final investment decisions expected to be implemented by 2028, according to Rystad Energy’s latest analysis.

This represents more than double the US$45 billion worth of developments achieved by FID between 2014 and 2023 and signals a boost for the region’s offshore gas industry.

By 2028, 25% of planned investments are expected to be made by oil and gas majors, while 31% will come from national oil companies. Rystad noted that East Asia’s upstream companies stand out with a 15% share and have growth potential through merger and acquisition opportunities and upcoming exploration projects.

The market research company assumes that the share of large energy suppliers could increase to 27% following TotalEnergies’ acquisition efforts in Malaysia.

Rystad claims that the potential for new project investment and capital commitments in the region has increased from $9.5 billion in 2022-2023 to about $30 billion in 2024-25. This upward trend is expected to continue through 2028.

Looking at the projections for approved investments between two leading nations in the region – Indonesia and Malaysia – the former is expecting an acceleration of its offshore gas activities, driven by major projects such as Inpex’s Abadi LNG, Eni’s Indonesia Deepwater Development and BP’s Tangguh Ubadari Carbon Capture (UCC).

These initiatives, together with recent discoveries in East Kalimantan and Andaman Islands, are expected to account for 75% of Indonesia’s total offshore gas investment earmarked for FID.

“Indonesia expects increased FID activity from 2025, supported by major projects led by global players such as BP and Eni. Malaysia’s upcoming FID projects underscore significant discoveries since 2020, mainly led by Petronas, PTTEP and Shell,” the company said in its analysis.

The region’s projected gas reserves from FIDs will increase to 58 trillion cubic feet by 2028, tripling the levels observed over the past five years, and will depend on the efficient monetization of new discoveries and the advancement of delayed developments.

Rystad Energy’s data shows that many projects require a gas price above the historical average of $4 per thousand cubic feet to be viable, with the optimal threshold being closer to $6 per thousand cubic feet. A gas price of $7.5 per thousand cubic feet could make up to 95% of planned developments economically viable, particularly LNG projects in Indonesia and domestic supply initiatives in Vietnam.

Supply chain companies could also see added value in floater-based projects and deepwater drilling, potentially supporting a renaissance of offshore gas production in the region.

Read the latest issue of OGV Energy magazine HERE

Published: 11-07-2024