JAKARTA - The Covid-19 pandemic and an ongoing shift to renewables are accelerating an exodus of the world's largest oil and gas companies from South-east Asia, dimming prospects for investment and raising the possibility of supply shortages once demand recovers.
Despite rebounding from lows of less than US$20 a barrel this year, oil is still at a five-year low. Demand for oil products in the Asia Pacific will fall by 8 per cent this year, according to UK-based energy consultancy Wood Mackenzie. Regional governments also played a role, insisting that as production sharing agreements expired, state-owned enterprises took over.
Investment in so-called upstream oil and gas production, which includes drilling and exploration, will fall by 30 per cent in Asia Pacific, with spending in the region on rigs, trucks and other equipment to shrink by US$90 billion by 2025, Wood Mackenzie said. More production is on the way. Construction of three offshore rigs at Mahakam is expected to fill half the gap once construction wraps up at the end of next year. In a separate development, Chevron agreed to a US$150 million deal earlier this month to drill more than 100 new wells, at the Rokan block in Riau, before handing over next August.
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