Energy Firms Get Drilling on Booming Gas Demand in Asia

With global natural gas prices on the rise, international oil and gas exploration companies have rolled up their sleeves, aiming to drill deeper to get more gas and capitalize on the booming demand in Asia.

More upstream investment decisions are expected in 2018-19. The number of projects launched worldwide has more than doubled compared to 2015-16, according to Wood Mackenzie, a leading energy research and consulting company, Nikkei reported.

That matches the situation in Southeast Asia, where Thailand has resumed a long-delayed auction for the Erawan and Bongkot gas blocks in the Gulf of Thailand to secure the continuity of gas supply for the country's power-generating sector.

They are brownfield projects whose concessions are due to expire in 2022 and 2023, respectively.

Sources at the Energy Ministry said at least three international oil and gas companies are expected to join the bidding: PTTEP, Chevron and Abu Dhabi sovereign wealth fund Mubadala Investment.

Gas from the two fields provide a combined 2.1 billion standard cubic feet per day, or around 40% of total gas demand in Thailand. Chevron is the production operator of Erawan block, while PTT Exploration and Production operates the Bongkot block.

In Malaysia, the state energy company Petroliam Nasional Berhad (Petronas) is also slightly increasing capital expenditures for upstream activities in 2018 from last year, according to upstream CEO Mohd Anuar Taib.

Petronas, like other oil majors, was hit hard by the plunge in oil prices from mid-2014 highs, but sharp cost cuts since then and a modest price recovery that began last year has helped the company boost profits so it can spend more.

The Malaysian company allocated $6.6 billion for upstream expenditures in 2018, slightly up from 2017. However, the company did not give a precise comparison.

The natural gas market is undergoing a fundamental transformation. It has overtaken the power sector as the driving force behind the growing use of gas, thanks to rising demand in Asia, the Middle East and the US, according to the International Energy Agency.

The IEA's forecast is in line with research by major international oil and gas companies, which have forecast that many countries, particularly in Asia, will shift toward gas-based economies, resulting in a rise in gas demand.