LNG resilience shines through Southeast Asian oil and gas...

LNG resilience shines through
Southeast Asian oil and gas production will plummet by 30% by 2025, but large unsanctioned discovered volumes promise a future LNG boom, Rystad Energy predicts.

Regional oil production has been declining since 2015 as more than half of the projects are mature and have been producing for decades, and Rystad says it will drop by almost 800,000 barrels per day over the next three years without more discoveries.

Yet output from fields supplying LNG projects, such as Indonesia's Tangguh LNG should decline slower, supported by several expansion and new development projects.

ConocoPhillips is looking at extending the life of Darwin LNG from the Timor Sea by using the Barossa field, while a recent diplomatic breakthrough defining a maritime boundary between East Timor and Australia has boosted hopes for Woodside Petroleum's stranded Greater Sunrise project.

Yet with key decisions still to be made around those projects, more than half of the production is coming from Indonesia and Malaysia, the former being the biggest contributor to oil and gas supply.

Gas production is dominant in the region, accounting for 60% of total output, with LNG volumes making up 36% of total gas supply standing at 52 million tonnes this year.

LNG production shows the least decline in the future and Rystad forecasts its share of total gas output will pass 40% by 2025 on the back of strong output from Tangguh and the ramping up Malaysian Kebabangan Northern Hub, among others.

However, declining production at Indonesia's Bontang project will see total LNG volumes fall in the medium-term, though Tangguh LNG Train 3 and Rotan FLNG in Malaysia currently in development should add more than 5MMt in 2025.

While the giant Abadi field was discovered offshore Indonesia was discovered in 2000, Petronas finding the Kasawari gas-condensate field in Block SK316 offshore Sarawak in 2012 and ExxonMobil's Ca Voi Xanh (Blue Whale) emerging in Vietnam, the oil price crash of 2014 has hit major project developments.

While the latter two discoveries added around 1 billion barrels of oil equivalent in reserves, 2015 was the worst year in terms of added reserves with just 200MMboe discovered.

Last year exploration performance recovered with several gas and gas-condensate fields found in Malaysia and Myanmar, together adding 700MMboe in reserves.

Yet most of the recent discoveries are still unsanctioned for development, and the Abadi field is not expected to take final investment decision until the 2020s.

The Tangguh LNG expansion project and the the Block B gas project offshore Vietnam have been sanctioned, while Chevron's Gendalo-Gehem project feeding into Bontang LNG is slated for development around 2020 and Malaysia's K5 gas field is due to be sanctioned next year, helping drive development spending.

With these in the project pipeline, Rystad expects operating costs to hover around US$21-23 billion a year.