Frost & Sullivan 2012 Indonesia Oil & Gas Sector Outlook

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Frost & Sullivan 2012 Indonesia Oil & Gas Sector Outlook

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Frost & Sullivan's analysis on oil and gas sector outlook for 2012 presented by Subbu Bettadapura, Director, Energy & Power Systems, Frost & Sullivan at the Frost & Sullivan 2012 Indonesia Energy &......

Frost & Sullivan's analysis on oil and gas sector outlook for 2012 presented by Subbu Bettadapura, Director, Energy & Power Systems, Frost & Sullivan at the Frost & Sullivan 2012 Indonesia Energy & Power Outlook Briefing on April 25 2012 in Jakarta.

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  • 1. 2012 Indonesia Oil & Gas Sector Outlook Asia Pacific Jakarta 25th April 2012
  • 2. Global & Regional Trends —CEO’s Perspective Average oil prices (Brent crude) forecast to be 1 above $ 90 in 2012 Global exploration and production (E&P) capital 2 spending to increase to $545 billion in 2012 Southeast Asia E&P capital expenditure in 2012 3 forecast to be $38.7 billion with continued exploration and development of deepwater fields Two LNG Regas terminals to be commissioned in 4 Southeast Asia in 2012 with more on the way in the subsequent years Asia refining capacity additions of 850,000 barrels 5 per day in 2012 likely to be double of 2011 levels Source: Frost & Sullivan analysis. 2
  • 3. Oil Price Outlook Supply risks have been the biggest driver for crude oil Oil Prices price 140 120 • The wide range forecast for Brent crude in 2012 is $90 - $115 per barrel (annual 100 average) 111.7 105 80 96.8 • Demand for petroleum products and supply$ / Barrel 60 79.5 side risks have driven crude oil prices higher 40 61.5 • High crude oil prices have the potential to 20 stall economic recovery and eventually bring down oil consumption 0 2007 2008 2009 2010 2011 2012e 2013e Brent Crude, Spot Prices (Annual Average) 3
  • 4. Upstream Sector Trends 4
  • 5. Global E&P Capital Spending Outlook E&P Capital Global E&P capital spending to increase in 2012 to $545 Spending billion • Some independent E&P 13.5% companies in North America $600 11.9% 15.0% 10.9% 11.2% have indicated that they may $500 10.0% spend less in 2012 compared to 2011 $400 5.0% Growth Rate 442 490 545 400 454 395 • Increased spending in Middle$ Bn $300 0.0% East and South America $200 -5.0% • Increased spending in Asia $100 -10.0% Pacific, specifically in (13.0)% Southeast Asia $0 -15.0% 2007 2008 2009 2010 2011 (e) 2012 (e) • F&S forecasts the global E&P capital spending to be $545 billion. Source: Barclays Capital E&P Spending Survey; Frost & Sullivan estimates for 2012 5
  • 6. Southeast Asia Capital Spending Outlook E&P Capital E&P capital spending in Southeast Asia to be around $ Spending 38.7billion • New areas being explored • Exploration and development 18.6% $45 20.0% of deepwater blocks 17.2% $40 18.0% $35 13.7% 38.7 16.0% • Rejuvenation of mature fields – especially in Indonesia and Growth Rate 11.1% 14.0% $30 35.0 Malaysia$ Bn 12.0% $25 29.8 10.0% 10.6% $20 22.6 25.1 8.0% • Development of marginal 19.9 $15 6.0% fields in Malaysia and $10 4.0% Indonesia $5 2.0% • Increased complexity of $0 0.0% 2007 2008 2009 2010 2011 (e) 2012 (e) projects driving up costs Source: Frost & Sullivan estimates based on annual reports of E&P companies and NOCs 6
  • 7. Highlights: Southeast Asia Upstream Sector 2 3 1-2 Years 3-6 Years 7-10 Years 1 4 High Growth 4.5 Medium 0 5 Growth Growth Potential 2012 Low Growth Anticipated Growth Rate in Segments to Watch Attractive Countries Investments 2012 E&P Capital • Deepwater Expenditure, Southeast • Enhanced Oil • Malaysia 10.6% • Indonesia Asia (2012): $38.7 Recovery (EOR) billion • Marginal FieldsDecreasing Stable Increasing Source: Frost & Sullivan analysis. 7
  • 8. Highlights: Indonesia and Malaysia Upstream Sector Anticipated Growth Rate in Segments to Watch Investments 2012 Indonesia Upstream Sector E&P Expenditure, Indonesia (2012): ~ $21 23.5% • Deepwater Projects billion Anticipated Growth Rate in Segments to Watch Investments 2012 Malaysia E&P Expenditure, • Deepwater Projects Upstream Sector Malaysia (2012): ~ $15 16.6% • Enhanced Oil Recovery (EOR) billion • Marginal FieldsDecreasing Stable Increasing 8
  • 9. Southeast Asia Deepwater Prospects Outlook Deepwater Investment in Deepwater Prospects to Increase Prospects Vietnam Waters Philippines Waters Thailand Waters Ca Rong Do: 319 m Malampaya: 850 m Benjarong: 3,220 m Brunei Waters Myanmar Waters Block CA-1 Mya: 140 m to 900 m E& P activity at M9, M11, AD1,2,3,6,8,9 Deepwater blocks Malaysian WatersDeepwater Definition Indonesia Waters• Deepwater - greater than Kikeh: 1330 m 300 metres depth up to West Seno: 1,000 m Gumusut/Kakap: 1000 m 1500 meters; Jangkrik: 400 m Siakap North: 1,300 m• Ultra deepwater - greater Bangka: 1,000 m Malikai: 565 m than 1500 meters depth Gandang : 1,800m Gehem : 1,800 m Gendalo: 1, 800 m Maha : 1,800 m Abadi : 1,000 m Source: Compiled by Frost & Sullivan 9
  • 10. Asia Pacific Offshore Drilling Outlook Offshore Offshore Drilling in the Asia Pacific to Increase in 2012 Drilling from 2011 levels Forecasts • Deepwater activity in 600 Southeast Asia is expected 500 to intensify in the coming yearsNumber of Wells 400 APAC Exploratory Shallow • Discovery sizes in shallow 300 APAC Development Shallow APAC Exploratory Deep water have been decreasing. 200 APAC Development Deep • More prospects for large 100 discoveries in deepwater 0 2010 2011 2012 • Discovery costs ($/barrel) Source: Frost & Sullivan estimates are higher in Southeast Asia compared to other Asia Pacific Offshore Wells Drilling Forecast deepwater regions • Demand for offshore support vessels to increase in 2012 10
  • 11. Southeast Asia Offshore Rigs OutlookOffshore Rigs A record number of rigs that were ordered in 2010 will Orders enter the fleet beginning mid-2012 • Concerns about tightening supply of End of 2010 End of 2011 End of 2012 high specification rigs led to the (e) (e) swelling of orders in 2010Global Jack-up 356 380 395Fleet • Though there are indications of oversupply globally, rig demand, especially for high spec rigs, is expected to increase in 2012Drillship 1 Drivers for Rig Construction • High-end Jack-up utilization is over To upgrade to High Spec Rigs forSemisub 5 • Enhanced Technical Capabilities 75% in Southeast Asia • Higher Operational and Safety Standards • Rigs operating in Southeast Asia are Tender 4 currently posting dayrates that exceed the global average for jackups Jackup 42 0 10 20 30 40 50 • The outlook for high end Jack-ups Rigs under Construction in the Southeast and Drillships looks good as dayrates Asian Region and utilization rates improve Source: Compiled by Frost & Sullivan 11
  • 12. Indonesia Rigs Outlook Rig Count Currently 54 rigs (42 Land and 12 Offshore) are active in Indonesia Indonesia Gas :11 60 Rigs 50 Oil : 43Rigs 42 40 54 rigs (2012) 30 Land Offshore 20 12 10 0 1/07 4/07 7/07 1/08 4/08 7/08 1/09 4/09 7/09 1/10 4/10 7/10 1/11 4/11 7/11 1/12 10/07 10/08 10/09 10/10• The rig count expected to rise as drilling activity picks up. The active rig count is a good indicator of 10/11 demand for products used in the oil & gas industry Source: Baker Hughes; Compiled by Frost & Sullivan 12
  • 13. Indonesia Deepwater Prospects Outlook Deepwater exploration and production are critical for Indonesia to increase domestic oil & gasDeepwater E&P Projects production Jangkrik Gendalo Development Planning Stage Development Stage CAPEX: ~ 2.9billionUSD Depth: 1800m Depth: 400m Onstream: 2016 Onstream: 2015 Operator: Chevron Operator: Eni Gandang Development Stage Bangka Depth: 1800m Development Stage Onstream: 2016 Depth: 1000m Operator: Chevron Onstream: 2014 Operator: Chevron Maha Development Stage Gehem Depth: 1800m Development Stage Onstream: 2016 Depth: 1800m Operator: Chevron Onstream: 2016 Operator: Chevron Deepwater Exploration Prospects • Surumana field by ExxonMobil Abadi • Pasangkayu field by Marathon and Talisman Development Stage Energy Depth: 1000m • Kuma field by ConocoPhillips and Statoil FEED Contract during 2012 • Karama field by Statoil Hydro and Pertamina FID – 2014; Onstream: 2018 • Mandar field by ExxonMobil Operator: INPEX • Sageri field by TalismanSource: Frost & Sullivan 13
  • 14. Midstream Sector Trends 14
  • 15. Asia Pacific LNG Re-gasification Sector Outlook LNG Imports to the Asia Pacific Region Set to IncreaseLNG Imports Further in 2012 Location : Jieyang, China Australia to add the largest LNG liquefaction capacity Start up : ~ 2012/2013LNG Exports during 2012 to 2016 Capacity : 2.0 MTPA Location : Zhuhai, China Start up : Phase 1, 2013 Capacity : 3.5 MTPA Location : Map Ta Phut, Thailand Start up : Phase 1, 2011 Capacity : 5.0 MTPALocation : Dabhol, IndiaStart up : 2011Capacity : 1.2 MMTPA Location : Melaka, Malaysia Start up : 2012 Capacity : 3.8 MTPA Location : Kochi, India Start up : 2012 Capacity : 5.0 MTPA Location : Jurong Island, Singapore Start up : 2013 Capacity : 3 MTPA Project: FSRU Jakarta Bay Start up: 2012 LNG Re-gasification Terminals – ongoing projects; Capacity: 3 MTPA Commission period during Q3, 2011-2013 Source: Compiled by Frost & Sullivan 15
  • 16. Indonesia LNG Industry: Challenges Challenges:  Technical challenges: For eg; Masela FLNG project  High investments needed – Hence, projects require more partners: For eg. Natuna LNG  Financing for large domestic-oriented projects – domestic off-takers need to become creditworthy  Need to increase gas supplies  Increasing domestic demand for natural gas curtails opportunities for export-oriented LNG projects  Need to develop gas supply and distribution infrastructure  Need to develop inter-country LNG distribution network  Need to adapt quickly to market changes 16
  • 17. Indonesia LNG and Regas Prospects Outlook Increase in liquefaction capacity and development of an inter-country LNG and Regas Projects LNG distribution network Project : Natuna LNG Plant Project: Conversion Project: Donggi Senoro LNG Plant Start date: 2018 of Arun LNG plant to Capacity: 2 MTPA (1 train) Status: Under discussion Receiving and Regas Status: Under construction Terminal Commissioning: 2013 Project: Tangguh LNG Plant Start date: 2014 - 2016Project: FSRU Belawan Capacity: 3rd train -Commissioning: 2014 additionalCapacity: 3 MTPA Status: PlannedStatus: Planned Project: Masela LNG Plant Project: FSRU Jakarta Commissioning: 2018 Bay Project: FSRU East Java Capacity: 2-4 MTPA Commissioning: 2012 Commissioning: 2014 Status: Planned Capacity: 3 MTPA Capacity: 2-4 MTPA Status: Under construction Status: Planned 17
  • 18. Downstream Sector Trends 18
  • 19. Highlights: Asia Pacific Refining Sector 2 3 1-2 Years 3-6 Years 7-10 Years 1 4 High Growth 3.5 Medium 0 5 Growth Growth Potential 2012 Low Growth Anticipated Segments to Watch Attractive Countries Investments Capital Expenditure, • China APAC (2012): ~ $ 15 • Refinery EPCIC • India • MRO billion Source: Frost & Sullivan analysis.Decreasing Stable Increasing 19
  • 20. Asia Pacific Refining Capacity Outlook Refining Asian refining capacity to increase by 850,000 barrels per Capacity day in 2012 compared to 400,000 barrels per day in 2011 • A major portion of the capacity addition 30.0 investment is by NOCs 29.5 29.6Million Barrels/Day 29.0 • China is expected to add 600,000 barrels per day refining capacity in 2012 28.5 28.8 28.0 28.4 • China and India adding refinery capacity in a bid to become self-sufficient 27.5 27.6 27.0 • India to become the second largest 26.5 refiner in Asia overtaking Japan 2009 2010 2011E 2012E BP Statistical Review, F&S Forecast • With refining capacity projected to increase by 3.1% and demand in major Asia Pacific Refining Capacity export markets projected to stay flat in 2012, margins are expected to be under pressure 20
  • 21. Indonesia Refining Capacity Outlook Downstream Though Indonesia is a very prospective location for new Outlook refineries, investments have not been very forthcoming 550,000 bpd shortage • Current refinery output leaves 30% assuming no capacity 1600 addition till 2015 shortage (which is met by imports) 1400 • This makes Indonesia a very prospectiveThousand Barrels/Day target for building new or expanding 1200 existing refineries 1000 • There is increasing demand for middle 800 distillates – so new refineries 600 configuration would have to maximize 400 middle distillates production • Declining crude oil production would be 200 a concern and so new refineries would 0 have to configured for Arabian or other 2007 2008 2009 2010 2011 2012 2013 2014 2015 imported crudes apart from domestic crude Source: Compiled by Frost & Sullivan 21
  • 22. Indonesia Downstream Sector Outlook Many of the refinery projects planned have been postponed due to market Downstream Outlook developments and also for want of incentives from the governmentDownstream Expansion Project: Upgrading Balikpapan Refinery• Naphta cracker Refinery, Commissioning: 2015 Kalimantan by Chinese Petroleum Capacity: 40,000 bpd Corp (150,000 to 200,000 bpd) Status: planned Status: Speculative• Naphta Cracker refinery, Banten. Investment of $8 billion. Status: Speculative• Dow Chemical Refinery Expansion. Investment of $500 million. Status: Speculative Project: Banten Bojonegoro, Phase 1 Project: Balongan Phase II Project: Tuban Commissioning: 2018 Commissioning: 2018 Commissioning: 2018 Capacity: 150,000 bpd Capacity: 20,000 bpd Capacity: 200,000 bpd Status: planned Status: planned Status: under developmentSource: Frost & Sullivan 22
  • 23. Indonesia Opportunities Summary Market Opportunity (2012-2018) – Slightly Optimistic Scenario Oil & Gas projects in Indonesia offer reasonable opportunities for equipment and service providers over the next 5 to 6 years Upstream Development Upstream $ 23.9 Billion LNG Regas LNG Terminals, Tank Farms, Pipelines, Gas Storage FLNG Facilities Liquefaction Midstream $ 2.7 $1 $8 $ 1.8 billion billion billion billion Refinery Petrochemical Downstream $ 5.1 billion $ 3.8 billion Source: Frost & Sullivan 23