According to Wood Mackenzie Asia-Pacific’s oil and gas sector is ready for recovery during the next 12 months, as increasing demand, stronger commodity prices and an increase in M&A activity bring more confidence to the region.
Asian LNG demand will increase led by China’s NOCs growth and new demand for upstream investment. Asian LNG demand also continues to grow due to Chinese coal-to-gas switch policies. In fact, Chinese LNG demand grew by 8 mt in 2017, and is expected to grow by another 12 mt in 2018. In total, Asia-Pacific LNG demand is set to grow 60% by 2030.
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In addition, LNG suppliers are also growing. The FID of LNG Canada in October 2018, was the first major greenfield project to move ahead since 2015, with Wood Mackenzie expecting 2019 to be the largest year for LNG FIDs ever.
As a matter of fact, 2018 has showed a big growth in new upstream project investments across both oil and gas, and this trend has filtered through to Asia-Pacific as well.
The key change now is the size of fields approved. The average project to hit FID in 2018 is over twice the size of those in 2017, up from around 375 million boe last year to around 850 million boe this year.
M&A activity is also increasing in the region, with over US$6.8 billion worth of upstream assets changing hands in 2018, the highest level of activity since 2014. Australia is responsible for much of this.
