Asia Pacific’s Future
Asia Pacific’s energy sector is on the brink of major change. New areas are opening to foreign investment, national oil companies are adopting more aggressive E&P strategies, and the supply/demand balance is shifting. This month’s JPT contains a special supplement outlining these and other trends and challenges and describes what to expect in the region’s upstream sector over the next several years.
One of the major changes under way in the Asia Pacific region is the sharp rise in energy consumption, which is leading to an increase in oil imports and cutting into gas available for export. Several major liquefied natural gas (LNG) projects are under construction or in the planning stages to help meet the increased demand for gas, which may eventually overtake oil as the region’s main hydrocarbon source.
Nowhere is the shift in the global energy balance more evident than in China. BP’s Energy Outlook 2035, published in January, predicts that by 2035 China will be the world’s largest energy importer and alone will account for more than a fifth of global demand. Changes are forecast for India as well, with its energy production rising by 112% and its consumption by 132% over the same period.
Significant policy shifts are occurring in China as well. The country’s leadership is pushing for changes in its energy sector that will better balance energy and economic growth with environmental protection. Liberalization of local fuel prices will be a financial boost for China’s major oil companies—Sinopec, China National Offshore Oil Corp. (CNPC), and PetroChina—allowing them to invest more both domestically and internationally. China’s state-owned companies are expected to continue to be aggressive at overseas mergers and acquisitions. The most recent deal was in November, when CNPC bought Petrobras’ oil and gas assets in Peru for USD 2.6 billion, reinforcing China’s growing presence in Latin America.
China continues to show interest in international unconventional plays, as the Asia Pacific region’s unconventional sector remains largely untapped. Only two shale plays have produced commercial volumes of gas thus far—one in China and one in Australia—and shale gas exploration wells have been drilled only in China, Australia, and India. The US Energy Information Administration estimates significant volumes of shale gas and shale oil resources in those countries as well as in Thailand and Indonesia.
Population in the Asia Pacific is forecast to rise significantly over the next 2 decades, putting additional strain on energy capabilities. Currently, about one-fifth of the region’s population still does not have access to electricity. This highlights the need for additional energy infrastructure and suggests that energy demand will only increase over the short to medium term. Although parts of Asia have exported gas, regional gas consumption is now competing to keep those supplies at home. And many of the oil fields in the area—in places such as Vietnam, Thailand, and Malaysia—are mature and in decline, which will lead to increased reliance on oil imports, primarily from the Middle East.
Asia Pacific’s Future
John Donnelly, JPT Editor
01 February 2014
No editorial available
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