The Asia Pacific oil and gas industry, making use of a period of relative oil price stability and seemingly maintained future demand, is increasingly looking to ramp up production rates which, in light of a rapidly approaching decommissioning wave, is leading to a thriving oilfield services market.
A period of stability is something the oil and gas industry has been yearning for ever since the outbreak of Covid-19 which, in the first quarter of 2020, burst onto the global arena in a devastating manner. But after a period of volatility driven by the pandemic and geopolitical developments in eastern Europe, the oil price has finally stabilised, settling at around US$80 per barrel across most benchmarks. From here, commentators such as Goldman Sachs and Fitch Ratings have predicted prices to maintain stable across 2023 and even hit US$100 by the end of the year.
One of the reasons for this security is a growth in oil demand, driven primarily by the re-opening of China at the start of the year. While the incessant rise of renewables has caused many to doubt the future prospects of fossil fuels as the world strives to its collective net zero ambition, according to OPEC’s 2022 World Oil Outlook 2045 energy demand will increase from 285.7 million barrels of oil equivalent per day (mboe/d) in 2021 to 351 mboe/d in 2045 at an increase of 23%. To meet this, the report suggests renewables will not be sufficient by themselves and oil and gas must continue to be exploited to meet the world’s needs. In view of this, it forecasts that by 2045, oil could retain a 29% share in the energy mix and gas would meet 24% of it. This translates to oil demand rising to 109.8mb/d in 2045 – in this scenario it must also be remembered that the expansion of production rates must also come alongside an extra 5 mb/d being added every year just to maintain current production rates, given an average industry decline rate of around 5%.
This is translating to a solid future for the global oil and gas industry and, in light of this, the Asia Pacific community is looking to increase its production rates – especially as the region consumes 35% of the world’s oil while supplying just 8% of its production. To do so, it is turning to its reliable tool of drilling but also on less-utilised methods such as well intervention. The latter is also being spurred by the region’s offshore oil well stock moving ever-closer to end-of-life with, according to a Wood Mackenzie 2018 report, more than 380 fields expected to cease production in the next decade.
