Roar of the Asian tigers
  from: Asian Oil & Gas
  by: Dr Roger Knight and George Venturas
  Friday, June 06, 2008

In terms of total offshore capital expenditure through 2012, Infield Systems expects Asian spend to represent the second highest level after that of Africa. Dr Roger Knight and George Venturas investigate why some developments are requiring unprecedented levels of regional investment, not seen until now, to successfully bring them onstream.

Projects such as Reliance’s Dhirubhai D6, Chevron’s Gehem/Ranggas and PTTEP/ Petronas’ Muda, located in India, Indonesia and the Malaysian-Thai JDA respectively, are regionally best suited to become the sites of future oil and gas hubs as the quest for untapped hydrocarbons intensifies throughout the region.

With regards to floating production in the Asia Pacific region, it is forecast that 42 units will be deployed or redeployed through 2012. This represents the largest total number of units of any region in the world but in terms of total expenditure these 42 units only account for 24% of all global facilities.

The reason for this is because on average these units are smaller than both those in African and Latin American waters and invariably conversions rather than newbuilds. Indonesia, China and Malaysia will install deeper water facilities while potential growth is expected from shallow water deployments in Vietnam, Cambodia, India and the Philippines.

FPSO deployment is expected to represent close to 60% of Asian floaters spend going forward while accounting for half of installations in terms of total numbers. Increasingly, FSOs and TLPs will provide a major part of the expected growth in the Asian market. Other floaters will not represent major expenditure as these are most likely going to be smaller projects and at times completed entirely by local operators only.

Vietnam will be very crucial in the future with high profile FSOs such as PetroVietnam’s Su Tu Vang FSO and the Rong 5 FSO to be installed within a year.

Recently, regional schedules have been hit by extended delays such as that caused by Chevron’s complete re-evaluation of the deepwater properties that it acquired when it took over Unocal. Despite these delays, aggressive growth is likely especially in pipelines going forward which will increase by a factor of two compared to the last five years. This is fuelled in part by projected major Vietnamese projects such as those associated with the Kim Long and Con Son Basin rigid pipelines which are expected to be operational in 2011 and 2012 respectively.

Traditionally, Asian plays have been dominated by the deployment of mainly converted assets. However this is being challenged and a more balanced ratio of newbuild to conversions is likely. Most noticeably and more importantly for the region local fabrication yards will contribute more to this growth with PT Batamec, Kochin and Unithai shipyards located in Indonesia, India and Thailand, looking the best placed to take advantage of this trend.

Due to Asian yards being at the forefront of global construction efforts especially in South Korea and Singapore, yards are working at full capacity and Infield Systems does not discount a number of projects slipping from a 2011 scheduled date of installation to 2012. This can be highlighted in the reported difficulties of matching Gumusut’s growing topsides to its designed base.

The majority of headlines have been dominated by deepwater projects such as Kikeh,which came onstream in 2007, but many shallow developments, some at depths of less than 100m, are using floating production systems as their chosen project types because of their remote geographical locations away from existing fixed infrastructure. Malaysian pipelines are also expected to give the region a boost with future pipelines increasing 160% compared to the previous five years. Petronas’ Kimanis-Bintulu pipeline, expected to be close to 500km long with a diameter of 30in, is one such project under discussion.

As time goes by, the general perception of this region is definitely shifting. Asia, once considered a region with extensive red tape and little promise, has surprised many commentators through efficient execution of high profile projects such as Murphy’s Kikeh project which included a spar, FPSO, a subsea element and an export pipeline.

As a result, this has gone some way toward convincing larger operators of the future potential of this play. The jury is currently out as to how much of this potential can be effectively realized in the near term. However, every operator’s quest to boost reserve portfolios in under-exploited regions makes this region the logical choice to look to for any future rapid expansion. AOG

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