SOUTHEAST ASIA Natural gas spurring Southeast Asian E&P

Unocal's Satun Field central production complex.

From the Andaman Sea aquatories of Myanmar and Thailand to China's Bohai Gulf, and throughout the interleaving seas of the islands and archipelagos of Southeast Asia, new fields, especially gas, are being discovered and developed, usually on fast tracks. This development is transforming virtually the entire region into a mammoth gas producer - primarily for consumption within Asia's own dynamic emerging economies.

The prospect of such a market is driving the booming development of the vast reserves beneath Asian and Pacific waters, and a host of major international operators and independents is settling in for the long haul, taking PSCs and JVs across the region. [See new 1997 Southeast Asia Map in this issue.]

China leading charge

In an effort to keep pace with its rapidly growing economy, the world's fastest at 8-10% annually, and with its quasi-Western-style market economy, China has attracted most of the world's major petroleum industry operators and is developing a dynamic petroleum industry. Offshore reserves now stand at least 6.2 billion bbl oil and 4.9 tcf gas, and are expected to soar and more and more exploration efforts prove successful, particularly in the South china Sea and Bohai Bay. In the brief eight years since exploration and development began in earnest, 17 major offshore fields have now been put in production, five in 1996, and several large fields and perhaps one giant are due onstream in the next few years.

Field complexes such as Phillips's Xijiang and Amoco's Liuhua, in the South China Sea, and Suizhong in Bohai Bay, as well as Arco's huge Yacheng gas field south of Hainan Island have led in activity, as China's largest fields. Each will see enormous development over the next few years, with over a hundred wells and associated infrastructure planned. The most important 1996 discovery was Dong Fang gasfield with 2.8 tcf gas reserves, northwest of Yacheng. China's production is set to rise by two million tons this year to 12 million tons, and by eight to ten million tons annually through 2010.

Malaysian action

In Malaysia and the Thai-Malay Joint Development Area, numerous new discoveries were made during 1996, primarily because more favorable terms for frontier and deepwater prospects have attracted brought in more operators. Occidental, Esso, and Shell have each had outstanding successes and expect their extensive investment in offshore Malaysian E&P to produce even more.

Triton-Carigali's JV discoveries of 1995, Cakerawala and Suriya, and IPC's Bunga Orkid, Bunga Raya, and Bunga Kekwa Fields proved to be major finds in 1996 and focus further explorations in the JDA. Esso's 100,000 b/d Guntong Field is being developed via 40 wells.

Occidental continues its successful streak off Sarawak, with finds in Block SK8, including Cili Radi-1, which tested 1 tcf gas, while Esso kicked off its $3.1 billion investment at Jerneh Field off Terengganu and Abu Field in Block PM8. Not to be outdone, Shell's discovery of the Kebabangan Field, tested 1.5 Tcf gas, in Block SB-1. Its Kinabalu Field, one of Malaysia's largest oil and gas discoveries, positions Sabah as a contender with Sarawak for gas production, but it is focusing major investment, some $8 billion, in development of 11 gasfields and connecting them to its MLNG II complex as a supplier to the Malay LNG Dua facilities in central Luconia.. A network of linked platforms is being constructed from which both processing and drilling will be done. Collective reserves are set at 8.6 tcf gas. It is expected to be fully onstream by 2000.

Thai hydrocarbon demand

To the north, Thailand's economy is one of the world's most rapidly expanding, with no small amount of credit for the financial phenomena going to the development of Gulf of Thailand oil and gas resources. The industrialization of the kingdom is, however, demanding ever greater energy input, thus the Thai government is pulling out all the stops in developing known reserves.

As a consequence of the massive effort underway, Thai production has risen almost yearly, now to over 555.6 million bbl a year oil equivalent. Most of that production has come from the enormous Bongkot, Erawan, and Funan gasfields and Shell's Sirkit oil field. Total's Bongkot itself accounts for a sizable percentage of output, producing more than 12.6 billion cu ft gas and 1.47 million bbl of condensate a year. But these are only the largest of a full range of fields currently producing in the Gulf of Thailand.

Among the most exciting newcomers are Maersk's Benchamas Field north of Tantawan in Block B8/32, and Pakakrong just south of it, as well as Unocal's Surat Field not far from Pailin Field in Block B12/27.

Vietnam slowing

Last year was far less dramatic for Vietnamese oil and gas activity than was 1995, a major activity year for Vietnam. There were only a few discoveries, none of major fields, and the year also brought the disappointing downgrading of what was once Vietnam's most promising field, Dai Hung, which is now producing less than 100 million bbl. Nevertheless, delineation drilling throughout the province has been proving up the known fields and verifying Vietnam's estimated billion bbl oil and 5 tcf gas reserves. Most notable for the year, was evaluation of Mitsubishi's huge Aurora Field, which has tested over 14,400 b/d oil and Rang Don, more than 7,159 b/d. This year is expected to be another period of slow growth, without dramatic discoveries.

Indonesia's gas future

Indonesia's future will be dominated by with gas like that of its neighbors, and the huge Natuna Field represents a major investment in that future. By the year 2000, the country will be a net oil importer, but that will be offset by it being a major gas exporter. For that reason, considerable attention is being given to conversion of the domestic energy base to gas while maintaining maximum revenue-producing exports of LNG to the country's principal customers, Japan, South Korea, and Taiwan. Current gas production is approximately 70 billion cubic meters a year, of which 60% is exported, but programs are in place to boost production to 125 bcm/yr by the end of the decade. This despite the diminishing production at its Arun Field and LNG complex (now producing 12.3 million tons annually via six trains and expected to be depleted by 2014.)

More than half of Indonesia's present export of LNG comes from the world's largest LNG plant at Pertamina's Bontang Field complex, with its six trains producing 15.4 million tons of LNG a year. Two additional trains are set to up capacity to 20.6 million tons.

If all goes as scheduled, Indonesia will both meet its internal demand and its total LNG export will stand at 28 million tons by the end of the decade, but that means gas from the massive Natuna Field must be factored in.

The $16-19 billion Exxon-Pertamina Natuna LNG Project could easily make that possible, with its reserves of 210 tcf gas, of which at least 45 tcf is recoverable, but the project has been placed on indefinite hold as of the end of 1996, until the possibilities of less costly reserves off Irian Jaya in the deepwater Celebes Sea tracts where Pertamina retains 85% of oil and 70% of gas production, with the balance left for production-sharing contractors.

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