Rising Need to Reduce Dependency on Import Drives Asia-Pacific Countries to Boost Oil and Gas Production through Offshore Activities
The need to reduce dependency on imported oil and gas is leading countries in Asia-Pacific to increase their domestic production of energy resources by increasing offshore exploration and production (E&P) activities. Countries in the region are witnessing increasing import dependency for oil and gas amidst their rising energy consumption, which is being driven by rapid economic development.
Over the last decade, the Asia-Pacific region has witnessed the fastest economic growth among all the regions of the world, primarily driven by the emerging economies in the region, such as China, India, Indonesia and Thailand. This rapid economic growth has resulted in a sharp increase in the consumption of energy resources in the key economies of Asia-Pacific, led by China, India, Indonesia and Thailand. An increase in oil and gas consumption coupled with limited domestic supply has led to the increasing import dependency of these countries for their oil and gas requirements.
In such a scenario, emerging economies have been taking a multipronged approach to ensuring their energy security. Key steps in this pursuit include increasing the domestic production of oil and gas through development of unconventional resources, developing conventional resources in the offshore areas, and ensuring a supply of oil and gas from international markets through investing in unconventional and conventional oil and gas projects in international markets.
Offshore Oil and Gas Activities Growing in Response to Declining Output in Onshore Fields
The oil and gas output from onshore fields are witnessing a decline which is resulting in an emphasis on exploration activities in offshore areas. Asian countries such as Vietnam, Malaysia, Thailand, India and Australia have been increasing their exploration activities in offshore areas in the recent past. Besides decreasing output from onshore areas in the current market context, another major deterrent for onshore E&P activities is the difficulty in acquiring land in most countries due to resettlement and compensation issues. Access to technology and finance, which had hindered development of offshore E&P activities in the past, are no longer issues for developing Asian countries.
FPSOs to Commercialize Small Offshore Oil and Gas Fields in Asia Pacific
In the Asia-Pacific region, there is an increasing usage of floating production storage offloading (FPSOs) vehicles for commercializing small oil and gas fields in offshore areas. FPSOs, vessels designed to perform the tasks of production, separation, storage and transportation of hydrocarbon, are used in deep seas where the reserves are low and setting up a fixed platform may not an economically viable option. It has been observed that among Asia-Pacific countries, China, Australia, Indonesia and Vietnam are the main countries that use FPSOs for developing their small oil and gas fields, while other countries are minor players.
Offshore Oil and Gas Resources Development to be Challenged by Territorial Disputes
A factor that may negatively impact the growth prospects of offshore oil and gas exploration and production in the Asia-Pacific region are territorial disputes between neighboring countries. This is evidenced in the territorial dispute between PetroVietnam (Vietnam) and OVL (India) in the South China Sea, where offshore oil and gas activities have been impacted due to the territorial claims of the littoral states. The two companies collaborated to explore some of the blocks of South China Sea, but the agreement between OVL and PetroVietnam drew opposition from China, claiming the development to be a violation of its sovereignty. Prior to this deal, it had been reported by various media outlets that some International Oil Companies (IOCs) had been advised by certain littoral states to abandon their oil and gas exploration deals with Vietnam.
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