Asia-Pacific to See Boost in FIDs in 2020

The Asia-Pacific region should see final investment decisions (FIDs) taken at $35bn of oil and gas projects targeting 4.6bn barrels of oil equivalent in 2020, Wood Mackenzie said in a research note on December 19.

FIDs have been scarce in recent years, covering projects worth only $5.5bn and developing 1.2bn boe of resources in 2019, WoodMac said.

The nearest project sanctions are at the Barossa gas field, which new operator Santos wants to use to backfill the Darwin LNG plant in Australia, Woodside’s Scarborough project that will underpin the Pluto Train 2 expansion and Shell’s Crux field, which will support the Prelude FLNG project.

In the first quarter, Malaysia’s Petronas is also expected to approve some domestic gas projects.

According to WoodMac, focus in the region will shift away from wildcat exploration, as operators look to delineate some of the key discoveries they have made over the past year. But some wildcat work could continue in New Zealand’s Great South Basin, deepwater Myanmar, offshore North Sumatra and offshore Papua.

The pipeline for asset sales will remain strong, WoodMac said, with the majors alone holding $18bn in non-core assets in the Asia-Pacific zone. Their priority will be dumping late-life, low-return and pre-FID projects with limited growth potential. Chevron’s Indonesia Deepwater Development and Repsol’s PM3 CAA in Malaysia are two examples.

In Australia, most of the deal-making will be LNG-related, with South Korea’s SK E&S expected to move in and take Santos’ 25% stake in Darwin LNG and Bayu-Undan, and Japanese investors at Darwin set to farm into the Barossa JV.