Southeast Asia Sees New Wave of Deepwater Gas Projects

Southeast Asia is entering a critical second wave of deepwater gas development targeting 28 trillion cubic feet of resources across Indonesia, Malaysia and Brunei. However, delivering these projects won’t be easy, says Wood Mackenzie.

The models suggest these projects have fragile economics, with many delivering less than 15% internal rates of return (IRR). As a result, operators face narrow margins for execution error as they race to deliver over US$20 billion of new infrastructure and supply by 2030, according to Wood Mackenzie estimates.

“Southeast Asia's shallow-water and onshore gas fields are maturing rapidly, and this necessitates a focus on deepwater resources that were once considered too risky and expensive,” said Dr. Munish Kumar, Senior Research Analyst (Upstream) at Wood Mackenzie. “Asia’s first wave of deepwater gas projects between 2008 and 2017 proved the commercial viability of the concept in new countries, such as India, China and Malaysia. But since then activity has been sporadic due to various commercial, regulatory and subsurface challenges. Now we are entering a new phase – Asia’s ‘Deepwater 2.0’ moment.”

According to Wood Mackenzie, Indonesia's non-associated offshore gas production has fallen more than 12% from its 2018 peak, while Brunei requires 500 million cubic feet per