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Strategic Analysis of the Upstream Oil and Gas Market in Southeast Asia

  • August 2013
  • -
  • Frost & Sullivan
  • -
  • 106 pages

Summary

Table of Contents

Declining Hydrocarbon Production Drives E&P Activities, Especially in Marginal and Deepwater Fields

This research service assesses the current scenario and future potential of the upstream markets in Southeast Asia covering Indonesia, Malaysia, Thailand, Vietnam, The Philippines, Cambodia, Brunei Darussalam, and Myanmar. It also discusses the market potential and the competitive landscape for key upstream equipment such as drilling rigs, pipelines and fixed platform segment. Key drivers and restraints that drives exploration and production activities in the region is also explained.

Major Research Findings

- Globally, there is a surge in oil and gas (O&G) exploration and production (E&P) activities as many producing fields are declining in productivity and need to be replaced. Success rates of exploration have been declining every year.
- The cost of finding and extracting hydrocarbons has increased substantially over the years. O&G field development solutions are now complex and involve higher costs. The new technologies available have opened up new opportunities for developing fields that were previously considered technically unfeasible.
- Energy security is a core issue for many countries, and this drives their interest in securing O&G supplies. O&G is a major contributor to the GDP for many O&G producing countries.
- One of the most attractive markets that offers high potential for growth is Southeast Asia (SE Asia). Indonesia, Malaysia, and Brunei are established O&G producers. Upstream activities in Thailand, Vietnam, and the Philippines have picked up. Myanmar and Cambodia are just opening up their oil and gas assets to global participants.
- Malaysia and Indonesia present opportunities for deepwater and also marginal fields.
- Southeast Asia is poised to become one of the global hot spots during the next five years driven by attractive hydrocarbon reserves, a robust business environment, and sustainable economic growth.
- Investments in the SE Asia market are led by the national oil companies (NOCs) and international oil companies (IOCs). Global companies have established their presence in Southeast Asia, especially in Malaysia and Indonesia. Malaysia is looking to become the oil and gas hub in Southeast Asia. The country is also investing in downstream infrastructure in a bid to sustain the oil and gas industry.
- E&P activities are receiving a boost due to declining production. In view of this, opportunities for enhanced oil recovery (EOR) have increased. Marginal fields are being developed to increase production.
- Deepwater fields being developed in Malaysia and Indonesia are likely to increase the technical capabilities of NOCs in this emerging area.
- Capital expenditure (CAPEX) investments are likely to be driven by specific upstream production equipment, as many new sites would be developed at offshore deepwater locations. Fixed production equipment and subsea pipelines are likely to be in high demand during the next five years.
- Investment opportunities in E&P are fraught with high risks, as production fields in these countries have soaring production costs due to their remoteness and lack of infrastructure. As a result, opportunities exist for O&G equipment suppliers and service companies to provide investors with the latest equipment with breakthrough technology at a competitive cost.
- Increasing political tension in the South China sea is likely to impact the future development of some hydrocarbon acreages in that region.
- Oil industry-related regulation is also likely to impact the cost of services provided.

Definitions
- The upstream O&G market is defined as a market that includes upstream O&G activities and their value chain ranging from hydrocarbon extraction to O&G distribution for midstream and downstream processing. Activities included are O&G exploration, drilling, and production.
- The upstream O&G value chain includes O&G companies establishing offices in Southeast Asia such as IOCs and NOC in each country, and O&G supporting companies that include independent private oil companies, equipment suppliers, E&P service companies, and engineering, procurement and construction (EPC) companies.
- The upstream O&G market size represents the annual CAPEX by O&G companies, which, in turn, impacts the market size of equipment and service providers.
- The countries covered in Southeast Asia are: Indonesia, Malaysia, Thailand, Vietnam, Myanmar, Brunei, the Philippines, and Cambodia.
- Key segments discussed in this study include the drilling rigs segment (onshore and offshore), pipeline segment (onshore and offshore), and fixed platform segment. Segments such as floating platform, subsea equipment, pressure equipment, remotely operated vehicle (ROV), and Xmas tree have not been discussed in detail.
- Oil units are in MBOPD (million barrels of oil per day) while gas units are in BSCFD (billion standard cubic feet per day).
- Price is in US dollars.

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