Asia/Pacific NOCs on look-out for upstream deals, joint ventures

The number of upstream projects sanctioned this year in the Asia/Pacific region is similar to 2017, according to new analysis by Wood Mackenzie.

Oct 15th, 2018

Offshore staff

SINGAPORE – The number of upstream projects sanctioned this year in the Asia/Pacific region is similar to 2017, according to new analysis by Wood Mackenzie.

However, the size of resources involved is much higher – on average around 287 MMboe against 143 MMboe last year.

Stand-out field investment decisions include SK320 andSK408 offshore Sarawak, Malaysia; Reliance’s KG D6 satellite cluster in deepwater offshore eastern India; and CNOOC’s first operated deepwater gas project in the South China Sea, Lingshui.

Together these projects will incur almost $8 billion of investment, according to Angus Rodger, upstream research director at Wood Mackenzie.

The Chinese national oil companies also appear to be stepping up their activities in response to rising domestic gas and LNG demand.

Senior analyst Maxim Petrov said: “CNOOC and PetroChina are raising their domestic budgets and returning to the international stage. Investment at home is increasingly shifting to gas, driven by its strategic national importance and lower carbon intensity.”

Chinese groups are also making their mark in high-impact exploration overseas and bilateral deals. “Expect the Chinese NOCs to continue focusing on large conventional oil fields in the Middle East and Latin America, but also to target integrated gas opportunities in Russia, Qatar, and Asia/Pacific,” Petrov said.

“Government to government relations and partnerships with the majors will be crucial in securing future growth opportunities,” added Petrov.

Wood Mackenzie has also identified a resurgence of M&A activity across the Asia/Pacific region, with more than $6.8 billion worth of upstream assets transferred so far this year, the highest since 2014.

Australia accounts for much of this total, led bySantos’ $2.2-billion acquisition of Quadrant Energy.

“Deal activity in Australia has been led by local players looking to reshape their portfolios to focus on domestic gas demand and future LNG backfill options,” said upstream research director Andrew Harwood.

“We expect to see further liquidity down under, as north Asian buyers seek to secure resources and private equity funds prowl for overlooked opportunities.”

Another notable recent deal was OMV’s $800-million entry into Malaysia, via a venture with Sapura Energy.

Petronas, Pertamina, and PetroVietnam are other NOCs in the region likely to be looking for new partnerships next year to support continued investment in their old and new field developments.

“Look out for more deals in Malaysia and Indonesia, particularly after Indonesia’s general election in April 2019,” Harwood said.

10/15/2018

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