SE Asia comes to LAGCOE

November 11, 2013

Laissez les bons temps rouler. Deep in the heart of Louisiana oil country, US representatives from two Asian trade organizations made the case for local investment at the 2013 Louisiana Gulf Coast Oil Exposition (LAGCOE), held in Lafayette.

Boon Ho Toh, director for the International Enterprise Singapore, addresses crowd at LAGCOE.The International Energy Agency (IEA)’s new World Energy Outlook 2013 report, which releases this month, noted that Southeast Asia’s energy demand has risen 250% since 1990, and the region’s energy demand is set to increase 80% by 2035. IEA’s data states that oil demand will rise from 4400b/d today to 6800b/d in 2035. Natural gas is expected to increase by 80% to 250 Bcm. The IEA’s data shows costs and potential supply disruptions.

Representatives from Malaysia and Singapore’s trade organizations were two of the featured speakers at this year’s international presentations at the 2013 LAGCOE conference. The delegates were there not only to drum up business partnerships but to drive the kind of technology sharing that will allow the two Asian countries to develop their oil and gas, and manufacturing assets. Boon Ho Toh, director for the International Enterprise Singapore, based in Los Angeles, believes Lafayette’s oil and gas industry could benefit Singapore as the country seeks to develop more deepwater, and harsh environment fields. In addition, with Asia’s strong demand for LNG imports, Singapore is in better position than most, as it is one of only 20 countries holding a free trade agreement (FTA) with the United States.

“Now with Sabine Pass winning approval, there’s a very strong market in Southeast Asia, Japan, and China. There’s a strong opportunity for Louisiana, when it comes to LNG exports,” Toh said to OE following his presentation.

Singapore already represents a very important market for the state of Louisiana. According to a recent report by the World Trade Center New Orleans, Singapore is Louisiana’s third largest foreign export partner – behind China (second) and Mexico (first) – representing US$1.53 billion in 2Q 2013, up 44% over the same period last year.

“Once Congress approves those export markets and LNG flows come in, it will be very positive for Louisiana and for Lafayette,” Toh said. “We [Singapore] definitely look forward to that. There’s a strong LNG demand in Asia, and if you have the supply, I can assure you, that we will be standing in line, ready to buy.”

IEA’s data shows that declines in mature fields coupled with limited large new prospects could cause oil production across the region to fall by almost one-third by 2035. As a result, the southeast Asia region is poised to become the world’s fourth-largest oil importer, behind China, India and the European Union with oil import dependency doubling to 75%, as net imports rise from 1900b/d to just over 5000b/d. The region’s spending on net oil imports is set to triple to US$240 billion in 2035. Thailand and Indonesia’s spending on net oil imports tripling to nearly $70 billion each in 2035.

Sikh Shamsul Ibrahim, Director of Malaysia’s Investment Development Authority (MIDA) discusses development opportunities at LAGCOE.Malaysia’s oil and gas industry boasts impressive stats with 4 billion bbl of proved oil reserves. The country is the second largest oil producer in Southeast Asia, producing 642.6 Kb/d in 2012. However, Malaysia’s output is in decline, having hit its production peak of 861.8 Kb/d in 2004, according to recent EIA production statistics.

The EIA further said that recent foreign investment in deep water and technically challenging fields primarily in the Sarawak and Sabah states provides impetus to maintain natural gas production levels over the next few years. However, production declines at Malaysia’s mature fields have led to investments in enhanced oil recovery (EOR) and the development of marginal and deepwater fields.

Sikh Shamsul IbrahimSikh Shamsul Ibrahim, Director of Malaysia’s Investment Development Authority (MIDA), based in Houston, discussed current challenges to production, and some of the ways the country is looking to boost oil recovery efforts on its mature fields. In 2011, both Shell and ExxonMobil opted to make billion dollar investments in enhanced oil recovery projects off Malaysia.

ExxonMobil put up RM$10 billion to fund development and drilling activities, as well as to upgrade and build new oil and gas facilities. ExxonMobil along with PSC partner Petronas concentrated improvements on seven mature offshore fields, including Tapis, Guntong, Tabu, Palas, Seligi, Irong Barat, and Semangkok.

The Tapis EOR project, located offshore Terengganu in the South China Sea, is on track for start up by the end of this year following the installation of the 23,500 tonne Tapis R platform jacket back in July. The project aims to boost the life of the Tapis field by an additional 30 years, and recover an additional 180MMbbl of crude. The field, which was discovered in 1969, is expected to reach peak production of 30,000 b/d by 2016-2017, according to a September report by Platts.

Shell similarly invested RM$38 billion for EOR projects offshore Sarawak and Sabah, East Malaysia. In November 2011, Shell announced the signing of a heads of agreement for two, 30-year production sharing contracts with Petronas to extend the life and increase recovery at the Baram Delta (BDO) and North Sabah fields. Shell said the EOR projects could boost production by an additional 90 to 100 Kb/d of oil and field life past 2040. Shell has four producing oil fields off Sabah operated under a new PSC signed with Petronas. Shell is also participating in the development of five deepwater fields including Gumusut-Kakap (33% operating interest) and the Malikai field (35% operating interest). In Sarawak, Shell maintains 40% interest in the 2011 Baram Delta EOR PSC.

Malaysia also boasts impressive natural gas numbers in addition to oil production and reserves. Malaysia is the second-largest natural gas producer in the region, according to recent EIA data, and it is second only to Qatar in LNG exports. Malaysia’s natural gas production has risen over the past two decades to meet growing domestic and export demands.

Toh and Ibrahim used their presentations at LAGCOE to tout several perks of doing business in their respective countries, namely stable local governments, a large talent supply, and well-developed infrastructure for oil, gas, and petrochemical projects. Both Malaysia and Singapore serve as manufacturing hubs for the Southeast Asia region, with both countries presenting easy access to nearby Asian markets. Singapore, especially, is already an established player in the shipbuilding industry with the likes of Sembcorp Marine and Keppel Corp. based in the country. Singapore, Toh said, is now a global leader in shipbuilding with >70% of global market share in the building of rigs, jackups, semisubmersibles, and FPSOs.

As of press time, a trade mission between from the city of Lafayette, Louisiana, to Malaysia has been proposed at LAGCOE, but no details have been announced. OE

Image Caption (top): Boon Ho Toh, director for the International Enterprise Singapore, addresses crowd at LAGCOE.

Image Caption (2nd from top): Sikh Shamsul Ibrahim, Director of Malaysia’s Investment Development Authority (MIDA) discusses development opportunities at LAGCOE.

Image Caption (3rd from top): Sikh Shamsul Ibrahim