Oil production in Asia-Pacific is declining at a rate not seen elsewhere in the world, with around half of losses coming from China alone, Wood Mackenzie has warned.
"We estimate 2016 production of 7.5 million barrels per day will fall by over a million barrels per day by 2020," said Angus Rodger, the energy consultancy's Asia-Pacific upstream research director, CNBC reported.
China, Indonesia, Malaysia and Thailand are among the biggest producers in Asia but the near halving of crude oil prices since 2014 has hit the industry and resulted in an annual average base decline rate of around 7% within existing oil fields, Rodger pointed out.
"Lower oil prices and the severe cuts to upstream capex (capital expenditure) to mature assets have increased decline rates," he explained in a video published on Wood Mackenzie's site.
Recently, global prices have staged a rebound as the Organization of Petroleum Exporting Countries and other producers move to implement a supply cut of nearly 1.8 million barrels per day for the first half of 2017.
"Regional oil production will be underpinned by giant fields in Indonesia, Malaysia and China but these fields are super mature and will require expensive techniques, high break-evens and capex cuts," Rodger said.
Moreover, the bulk of exploration in the region is on gas so there are far too few new oil projects to make up for dwindling production, he continued, pointing out there are only a handful of undeveloped fields that can be online by 2020.
"The scarcity of new oil discoveries over the last two decades combined with lower prices and hefty capex cuts, particularly to legacy fields, will see decline rates spiral across the region."
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