Softening crude prices slow APAC oil and gas projects

A “softening narrative” in oil prices over the last 12 months has not dampened the optimism of Westwood Global Energy offshore energy services director, Thom Payne. “Despite this volatility or uncertainty in the crude market, we still expect a robust level of spending in offshore oil and gas,” said Mr Payne in reviewing the near-term offshore EPCI capex – essentially all the investment that goes into building offshore infrastructure for oil and gas projects. Westwood Global Energy forecasts offshore EPCI capex will total US$113Bn in the 2025-2026, or an average of about US$55Bn-US$56Bn per annum.

Brent crude oil began 2025 at almost US$76 per bbl, but has fallen to about US$66.

Presenting at Offshore Support Journal Conference, Asia, in Singapore in early September, Mr Payne said these levels are like those over the past few years. “And if we characterise the last few years in offshore - it’s been very robust. We’ve seen pricing growth, utilisation growth, and we’ve all had a pretty good time of things all the way across the supply chain,” he said.

Rystad Energy, project manager, advisory, Andreas Bakke Moan, pointed out a potential shortfall in the global supply vs demand – forecasting as much as 58M bbl of oil per day – by 2030 in a baseline view of the clean energy transition. “There’s a huge gap that we need to fill in order to meet demand, even in the fastest transition goals,” he said. Rystad Energy believes peak oil demand will not be reached until 2035. As a result, oil majors are transitioning “their money back into oil investments” from the renewables and clean energy. Shell, BP, ExxonMobil and Petrobras, for example, are all increasing their upstream investments. Much of that investment is flowing into gas development.

“Oil majors are transitioning their money back into oil investments”

Of the 107 fixed platforms (including carbon capture facilities) that will be ordered in 2025-2026, Mr Payne expects 31 of those to be in APAC and 19 of those to be in southeast Asia, across Vietnam, Malaysia and Indonesia. Latin America will dominate new floating production platforms, six are targeted for APAC and five in southeast Asia. Mr Payne also noted there is a “sizable shopping list” of rigid pipelines and subsea trees to be installed in the region.

One of the issues weighing on the Malaysia oil and gas market is the dispute between Petronas and the Sarawak state-owned oil and gas entity, Petros, over control of the country’s oil and gas resources.

Arus Jaya Oil & Gas managing director, Vivek Khabya, said geopolitical and global macroeconomic factors and the dispute between Petronas and Petros have taken the Malaysian oil and gas market off the rails.

Mr Khabya’s firm is a leading charterer of high-spec platform supply vessels and subsea vessels in southeast Asia and West Africa. He said low oil prices led to budget cuts and delays in regional projects. While characterising 2023 and 2024 as good years, Mr Khabya said: “This year has been slow. We expect to see a slight pick up over the next 18-24 months, but we don’t expect to see the levels of 2023 and 2024 yet. We may see some of those levels come back, provided the oil price climbs and geopolitical situations become more favorable for our industry.”