Asian upstream companies are rapidly stepping up efforts to play their part in addressing the tight global crude oil supply situation as countries across the region strive to ensure supply security amid ongoing geopolitical tensions related to Russia and Iran, as well as the OPEC’s conservative output stance.
With multiple sanctions and financial blockades forbidding a free flow of Russian and Iranian crude and limited upside seen in OPEC+ production quotas, Asian crude importers could ill afford to rely entirely on major producing nations to resolve tight supply conditions, market analysts and upstream industry sources in Singapore, Bangkok, Seoul, Jakarta and Tokyo said over Nov. 11-17.
“You simply cannot take anything for granted when it comes to crude oil supplies in times of a volatile geopolitical situation and uncertain global production outlook,” said an upstream operation manager at Thailand’s PTT Exploration and Production.
“Asia, as the world’s biggest energy demand center, should at least try taking supply and high price matters into its own hands to the best of its ability,” said an upstream investment management source at Malaysia’s state-run Petronas.
For Asia, an ideal oil price range is seen at around $60-$70/b, which would be fair for consumers, refiners and upstream companies, according to 11 crude traders and market analysts at major refining and upstream companies in Indonesia, Singapore, Japan, South Korea, Thailand and China surveyed by S&P Global Commodity Insights.
Southeast Asia leads new output
Southeast Asian nations have been outperforming in 2022 in terms of new upstream discoveries and production, with Vietnam recently kicking off new output from its southern development areas.
Earlier in November, Vietnam-Russia joint venture Vietsovpetro said it has produced first oil from the RC-10 platform built at the Rong field in its southern Block 09-1, with initial output from the two wells of the platform reaching 350 mt/day of crude oil.
Vietsovpetro also pumped first oil from the Ca Tam 2 platform at the Ca Tam field in its 09-3/12 Block on Oct. 28 and plans to put into operation nine of the 12 wells at the platform by end 2023.
The joint venture plans to produce 2.9 million mt of crude oil and condensate in 2022, including 2.8 million mt from Block 09-1, where the aging Bach Ho field is located, and 101,000 mt from the Ca Tam field’s Block 09-3/12, according to Vietsovpetro.
Malaysia’s state-run oil and gas company Petronas recently achieved its first oil discovery in Brazil, a company source with knowledge of the matter said.
The state-run company’s subsidiary Petronas Petróleo Brasil made the breakthrough discovery at the 4-BRSA-1386D-RJS well in the pre-salt Sépia oil field.
“The well is located in the prolific Santos Basin, about 250 km off the coast of Rio de Janerio, at a water depth of about 2,000 meters. The net oil column is one of the thickest ever recorded in Brazil,” Petronas said in a statement.
The new discovery comes after Petronas announced successful production at the Gumusut-Kakap Phase 3 deepwater development project in October, raising expectations among East Asian refiners that up to 10 spot cargoes of highly popular light sweet Kimanis crude could be available per trading cycle next year. In comparison, around 7-8 cargoes of Kimanis crude in 600,000-barrel stems are typically offered on a monthly basis.
Indonesia’s state-run oil and gas firm Pertamina said its upstream subsidiary operating in the country’s east recently discovered gas and ultra-light crude oil contingent resources in Bojonegoro, East Java, as a result of the exploration well Kolibri (KOL)-001 drilling.
Maintain, maximize equity barrels
While making new discoveries and production, as well as unlocking new upstream reserve potential, remain crucial for the world that would continue to depend on oil as a key energy source for a few more decades, maintaining and maximizing existing equity barrels are just as important for Asia’s net crude importing nations, according to analysts at Korea Petroleum Association and Mitsui.
South Korea’s state-run Korea National Oil Corp. and Thailand’s PTTEP are fully committed to providing most or all of their equity crude production from Middle Eastern upstream projects to their respective domestic refineries, rather than trading the barrels in the international market, officials at the two entities said.
Japan’s Sakhalin Oil and Gas Development Co., or SODECO, has received the Russian government’s approval to continue participating in the new operator of the Sakhalin 1 oil and gas project, Japan’s Chief Cabinet Secretary Hirokazu Matsuno said Nov. 15.
The Japanese government had been striving to maintain its stakes in the Sakhalin oil and gas project in Russia’s Far East, where light sweet Sokol crude is produced, after the exit of ExxonMobil, the previous operator and owner of a 30% stake in Sakhalin 1, after Russian President Vladimir Putin ordered a new Russian operator to be established for the project on Oct. 7.