EXPLORATION &
DEVELOPMENT
TECHNOLOGY
AUSTRALIA, SOUTH EAST ASIA POTENTIAL
SANCTIONED VOLUMES
–––––– 2017 –––––– ––––––– 2016 –––––––
Liquids Gas Liquids Gas
–––––––––––––––– MMboe ––––––––––––––––
Indonesia 131 65 65 1,031
Vietnam 101 81 53 529
Malaysia 42 0 27 56
Australia 10 72 75 0
Cambodia 11 0 0 0
Total 285 218 220 1,616
Combined total 512 1,835
Source: Rystad Energy UCube
Asia Pacific development increases
with lower sanctioned volumes
Rystad Energy believes projects in Australia and
South East Asia will develop 512 MMboe in recoverable liquids and natural gas resources in 2017, a
75% drop from 2016.
The study concludes 2017 sanctioned projects
in the region contain more liquids (58%) compared to 2016,
which contained primarily gas (88%). Leading countries include Indonesia and Vietnam, which account for almost 75%
of potential financial approvals in 2017 (see Table).
In 2016, projects equaling 1,835 MMboe were sanctioned
in the region. But this trend is skewed by two major projects,
BP PLC’s Tangguh expansion at Bintuni Bay, West Papua, Indonesia, and PetroVietnam’s Block B-O Mon project offshore
Vietnam (OGJ Online, June 17, 2015, and Sept. 14, 2016).
According to Rystad, the two projects accounted for 75% of
the gas volume in projects that reached final investment decision (FID) in 2016.
Managing expectations
Despite lower sanctioned volumes in 2017, the count of potential projects is higher than 2016, Rystad said.
Australia and South East Asia have not “gone into a slumber following the price slump,” said Rystad senior analyst
Readul Islam. The Rystad 2017 forecast balances operator
and industry expectations versus recent project news flow
to assess candidate projects’ chances of attaining FID. “The
upside and downside risks to the forecast mean all stakeholders will be eagerly following 2017 approvals in these regions,” Islam said.
Projects, delays
The Ande-Ande Lumut (AAL) project in northwest
Natuna Sea offshore Indonesia holds 107 MMboe
and could comprise 20% of the 2017 sanctioned vol-
umes in the Asia Pacific region, according to Rystad.
AWE Ltd., Sydney, a 50% partner in the project
with operator Santos Ltd., has delayed FID due to
the low-price environment. But the company also
cited low prices as offering the potential to save de-
velopment costs as suppliers and service companies compete
for reduced exploration and development opportunities.
Indonesian oil production is on course to decline to 2020,
but sanction of the AAL project could mitigate production
losses.
Repsol SA’s Ca Rong Do (CRD) floating production, stor-
age, and offloading (FPSO) project in Vietnam has also been
delayed. The CRD oil and gas field, discovered in June 2009,
is in Block 07/03 on the southern border of the Nam Con Son
basin, 420 km offshore Vietnam. WoodMackenzie Ltd. has
said an FID is expected in second-half 2017 on CRD develop-
ment. CRD is roughly half the size of AAL and accounts for
12% of 2017 FID volumes from the region, Rystad said.
Cambodia’s Block A, home to the Apsara oil field, covers
4,709 sq km in the Gulf of Thailand over the Khmer basin,
roughly 150 km offshore Cambodia in 50-80 m of water.
Kris Energy Ltd. is developing the Apsara oil field, Cambodia’s first, and timing could have been affected by the
operator’s recent debt restructuring. The operator has since
described Apsara as one of its net-present value-positive investment priorities.
Development outcome
Projects such as AAL and CRD could already have been approved had prices not declined. Rystad’s 2017 forecast acknowledges the possibility of FIDs sliding into 2018, responding to market turbulence, Islam said.
Development volumes in Australia and South East Asia
also have an upside, many of the projects expecting 2017
FIDs are being risked into 2018. AWE’s final investment decision for its Waitsia Phase 2 onshore gas scheme, in Western Australia, has been risked into first-quarter 2018 against
the operator’s year-end 2017 goal. Positive appraisal results
and increased momentum in gas sales agreements, however,
could tip project sanctioning into 2017.
Tayvis Dunnahoe
Exploration Editor
