Oil and gas in Asia: Part 1

Indonesia

To 2023, BMI expects crude oil production to fall between 2014 and 2023 as there are no large projects to provide new output. Indonesia’s gas production is expected to continue on a downward path this year and in to next year however, BMI anticipate a turnaround in the industry in 2016 due to major new projects and also expectations that a more stable regulatory environment will enable the sector to move ahead with some investment decisions that are currently stalled.

BMI expect oil consumption in Indonesia to see a short term contraction due to a cut in fuel subsidies and a decrease in the use of oil for power generation. However, when President Elect Jokowi comes into power, he is expected to bring with him economic growth which could revive oil demand levels. Also, there are high levels of government support for the construction of new refining capacity in the country according to BMI, as well as for the modernisation of existing plants in an effort to meet the increasing levels of oil demand. Yet, BMI expect proposals to encounter problems when it comes to financing and only the Bontang refinery plans are anticipated to achieve success.

When it comes to the consumption of gas, BMI expect an increase to 2023 as the power sector switches to gas from diesel and there is a greater availability of it due to LNG imports. The increase in gas consumption is expected to lower the levels of exports of it from Indonesia.

South Korea

In BMI’s view, the industrialised economy of South Korea along with poor performance in the upstream industry is going to mean the country keeps its position as a large importer of crude oil and natural gas. Poor refining margins in the country along with high oil prices are also expected to turn the country’s large petrochemical sector towards using gas as a feedstock. This is expected to support the growing importance of gas over oil in the economy as a whole.

When it comes to key trends in South Korea’s oil and gas sector, BMI has said that the refining sector will keep its crude oil importer requirements high. It is also expected to remain heavily exposed in the Middle East, given that the region supplies more than 80% of its crude oil needs. Refining margins in the country are being squeezed and will continue to be by stronger regional competition and slower demand growth in export markets. Overall, South Korea is expected to remain a large gas consumer however, poor prospected for new gas developments over the period to 2023 will keep the country dependent on LNG imports for almost 100% of its demand according to BMI. The country is likely to remain the world’s second largest importer of LNG to 2023.

Taiwan

BMI have highlighted that Taiwan is almost 100% reliant on imports to meet all its energy needs and expects this status to remain in the short term at least. The country is also increasing its demand for gas and this has created a greater in road for LNG. Taiwan is a marginal producer of gas but despite this, the country’s Ministry of Economics, according to BMI, is focusing on gas playing a big part in the country’s future energy mix. BMI predict that gas consumption in Taiwan will stand at approximately 16.7 billion m³ to 2017 and rise to 24. 8 billion m³ in 2023 as new LNG import capacity becomes available. LNG supply agreements are anticipated by BMI between Taiwan and the US.

When it comes to refining in Taiwan, with planned closure of the Kaohsiung refinery expected next year, the country’s crude oil distillation capacity is expected to drop to 1.09 million bpd by 2023. Further expansion of the refining sector in the country is not expected as the country experiences growing environmental consciousness and weaker growth in the local market due to increasing local market competition.

Edited from report briefings by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/gas-processing/30092014/oil-gas-asia-bmi-pt-1/