Southeast Asia offshore gas ‘renaissance’ to unlock $100bn by 2028

Offshore gas production in Southeast Asia is set to unlock a $100bn potential, driven by several planned final investment decisions expected to materialise by 2028, according to Rystad Energy’s latest analysis.

This represents more than a twofold increase over the $45bn worth of developments that reached FID from 2014 to 2023 and is pointing towards a surge for the region’s offshore gas industry.

Oil and gas majors are expected to drive 25% of these planned investments through 2028, while national oil companies will account for a 31% share. Rystad noted that East Asia’s upstream companies are emerging with a 15% share with potential for growth through M&A opportunities and upcoming exploration ventures.

The intelligence firm believes that the role of majors could further expand to 27% following TotalEnergies’ acquisition efforts in Malaysia.

Rystad claims that the potential of new project investments and capital commitments in the region surged from $9.5bn in 2022-2023 to approximately $30bn in 2024-25. This upward trajectory is projected to continue until 2028

When looking at forecasts for sanctioned investments between two leading nations in the region – Indonesia and Malaysia – the former expects to accelerate its offshore gas activities. This is 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, along with recent discoveries in the East Kalimantan and Andaman provinces, are projected to account for 75% of Indonesia’s total offshore gas investments slated for FID.

“Indonesia anticipates increased FID activity starting in 2025, bolstered by major projects spearheaded by global players like BP and Eni. Malaysia’s upcoming FID projects underscore significant discoveries made since 2020, primarily managed by Petronas, PTTEP and Shell,” the company stated in its analysis.

The region’s projected gas resources from FIDs are set to rise to 58 tcf by 2028, marking a three-fold increase from levels observed in the past five years. This does rely on efficiently monetizing recent discoveries and advancing delayed developments.

Rystad Energy’s data indicates that many projects require gas prices above historical averages of $4 per thousand cubic feet to achieve profitability, with an optimal threshold closer to $6 per thousand cubic feet while a gas price of $7.5 per thousand cubic feet could potentially make up to 95% of planned developments economically viable, especially LNG projects in Indonesia and domestic supply initiatives in Vietnam.

Supply chain companies could also see increased value for floater-based projects and deepwater drilling perhaps facilitating an offshore gas renaissance for the region.

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