Region: Asia Pacific
Content Types: Report
Date: July, 2023

The report endeavours to understand the position of Southeast Asia DA industryWhile the oil and gas industry in Southeast Asia is looking ahead to an impressive array of merger and acquisition deals, the region cannot forget its ever-growing decommissioning and abandonment (D&A) liabilities. Approximately 200 offshore fields in Southeast Asia, comprising more than 1,500 platforms and 7,000 plus wells, are likely to stop producing by 2030.

Sustainable D&A practices now stand more relevant than ever as a recently released IEA report predicts that high prices and security of supply concerns highlighted by the global energy crisis is hastening the shift towards cleaner energy technologies. Circumstances have led analysts from Goldman Sachs to revise its bullish prediction of the Brent crude price hitting US$100 by mid-2023 to finish as low as US$86 this year. Such waning confidence in the future oil price and demand in the face of the growing energy transition especially calls for serious consideration of end-of-life responsibilities by operators.

To navigate the elaborate and often complicated process of D&A, operators must follow clear regulatory regime, which is the only way to understand their liabilities. To establish an effective regulatory framework, it may help Southeast Asia to play catch-up with foolproof guidelines and processes already in place elsewhere, such as the UK or the Gulf of Mexico. Chevron and Shell are currently collaborating with Thai and Bruneian regulators respectively through knowledge transfer and pilot project initiatives.

While Southeast Asia is following international conventions such as the International Maritime Organisation Guidelines (IMO) and the United Nations Convention on the Law of the Sea (UNCLOS), it has also adopted new clauses along with these to make them region-specific. For example, the area of ‘pipelines’ is an addition by the ASEAN Council of Petroleum – otherwise absent in the global frameworks – to allow export pipelines to be left in situ, provided that there is no history of pipeline spanning, or movement of the seabed.

A cheap alternative to the costly affair of decommissioning, the Rigs to Reefs programme has the potential to benefit marine life as well. The rig-to-reef way of D&A can spare companies a significant capital. In the Asia-Pacific region, an average 6,000-ton oil platform will cost approximately US$35mn to completely remove, notes an Asia-focused research website. However, D&A via the rigs-to-reefs approach would cut that amount in half, with an average saving of up to nearly US$22mn per platform decommissioned, according to decommissioning expert Brian G Twomey.

Click here to read the free-to-download Offshore Network’s APAC decommissioning and abandonment report to gain further insights into the industry and where it stands in Southeast Asia.