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National oil companies need new M&A strategies to meet growing energy demand
Southeast Asia will see growing oil and gas demand in the coming years as it sustains impressive economic growth.
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The MD – 111 well in Mandu Field, Mahakam Working Area (WK), East Kalimantan, is managed by Pertamina Hulu Mahakam (PHM) and has been drilling and producing gas and condensate since Sept. 26, 2019. (JP/N Adri)
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outheast Asia will see growing oil and gas demand in the coming years as it sustains impressive economic growth. Expanding populations and prevailing industrialization trends are likely to see both domestic and industrial energy demand increase in parallel. Overall regional energy demand is projected to grow by about 3 percent annually to 2030 according to the International Energy Agency (IEA).
Oil and gas are expected to play significant roles in meeting the escalating energy demand as Southeast Asia builds toward the widespread installation of renewable energy. While renewables are the inevitable future, they will be insufficient to meet surging energy demand in the short- to medium-term. With three-quarters of the region’s energy demand over the next decade projected to be met by fossil fields, it is clear that a more efficient and optimized oil and gas industry is vital during the energy transition phase.
Southeast Asia’s oil and gas asset landscape is relatively mature and dominated by national oil companies (NOCs) operating in mature fields with declining production scales. Organic growth will rely on new technologies such as enhanced oil recovery (EOR), digitalization and improved late-life field management to optimize the recovery from existing fields. These technologies alone will not be enough to sufficiently boost oil and gas supply across the region and will require matching growth strategies to address new energy challenges.
The last decade has witnessed international oil companies (IOCs) offloading onshore assets and exiting Southeast Asia, driven by the energy transition, complexity of legal and regulatory frameworks and the dominance of NOCs. Several IOCs have either exited, or have shrunk their regional footprints, and others are carefully reevaluating their Southeast Asia portfolio in the face of these pressures.
Southeast Asia is projected to become a net natural gas importer by 2025, and the bill for oil imports is set to more than quadruple to reach over US$200 billion by 2030. This evolving energy landscape will necessitate growth in fresh fields and consolidated operations to meet growing demand.
Building a resilient energy landscape
