BAKU, Azerbaijan, July 12. Offshore gas production in Southeast Asia is set to unlock a $100 billion potential, driven by a surge of planned final investment decisions (FIDs) expected to materialize by 2028, says the latest forecast by Rystad Energy, Trend reports.
This marks a more than twofold increase over the $45 billion worth of developments that reached FID from 2014 to 2023, signaling a significant boost for the region’s offshore gas industry.
The upcoming period of rapid growth is bolstered by deepwater projects, recent successful discoveries in Indonesia and Malaysia, and advancements in carbon capture and storage (CCS), Rystad Energy assesses. These elements will be crucial in meeting the region’s sanctioning agenda in the years ahead.
Oil and gas majors are projected to drive 25 percent of these planned investments through 2028, while national oil companies (NOCs) will account for a 31-percent share. Notably, East Asia's upstream companies are emerging with a 15-percent share, showing potential for growth through mergers and acquisition (M&A) opportunities and upcoming exploration ventures. The role of majors could further expand to 27 percent following TotalEnergies' substantial acquisition efforts in Malaysia.
Despite the promising future for offshore gas development, persistent project delays remain a concern. Factors such as deepwater and sour gas economics, infrastructure readiness, and regional politics have caused widespread delays, some persisting for over two decades. However, the emergence of CCS hubs in Malaysia and Indonesia could be a game-changer. The high carbon dioxide (CO2) content in upcoming offshore projects necessitates CCS for financing and regulatory compliance. Both countries are exploring depleted reservoirs from mature fields as potential CO2 storage sites. The growing recognition of these reservoirs' potential, combined with the pressing need for emissions reductions, is significantly boosting demand for CO2 storage and fueling a surge in offshore gas development expected from 2025 onwards.
The region's gas sector anticipates substantial growth, with projected gas resources from FIDs set to rise to 58 trillion cubic feet (Tcf) by 2028, marking a threefold increase from levels observed in the past five years (2019-2024). This growth hinges on efficiently monetizing recent discoveries and advancing delayed developments. Despite a favorable investment climate, operators face economic challenges, particularly in deepwater and sour gas ventures. Rystad Energy’s forecast 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.
With significant investments and strategic advancements, Southeast Asia's offshore gas industry is on the brink of a transformative period. The region’s commitment to addressing energy security and environmental sustainability, coupled with innovative solutions like CCS, positions it for a prosperous future in offshore gas development.
