outlook for offshore oil & gas exploration and production projects and offshore energy vessels

Outlook for Offshore Oil & Gas Exploration and Production Projects

and Offshore Energy Vessels

Subbu Bettadapura

Associate Director, Energy Practice, Frost & Sullivan

April 2009

Table of Contents

Offshore Exploration & Production Projects Currently Taking Place in the Asia Pacific Region: What is the Outlook for Offshore Energy Vessels Projects?

11

22

33

Overview of Offshore Field Developments in the Asia Pacific Region: Mid to Long Term Prospects for the Region

Potential Offshore Reserves

Outlook for Offshore Energy Vessels

44 Conclusion

Proved Oil & Gas Reserves in the Asia Pacific Region (End 2007)

11 Potential Offshore Reserves

Malaysia: Oil 5.4 tmBGas 2.48 TCM

Indonesia: Oil 4.4 tmBGas 3.0 TCM

China: Oil 15.5 tmBGas 1.88 TCM

Bangladesh : Oil 0.44 tmBGas 0.39 TCM

Australia: Oil 4.2 tmBGas 2.51 TCM

India: Oil 5.5 tmBGas 1.06 TCM

Myanmar: Oil 0.5 tmBGas 0.6 TCM

Brunei: Oil 1.2 tmBGas 0.34 TCM

Thailand: Oil 0.5 tmBGas 0.33 TCM

Vietnam: Oil 3.4 tmBGas 0.22 TCM

TOTAL: Oil 40.8 thousand million barrelsGas 14.46 TCM

PNG: Gas 0.44 TCM

Pakistan: Gas 0.85 TCM

1TCM=35.3TCF

Source: BP

Offshore Potential in the Asia Pacific Region; Offshore Prospects

11 Potential Offshore Reserves

KG Basin6.76 TCF

Offshore Sabah (10 TCF) & Sarawak

(45 TCF) 4.2Bboe proven; 8Bboe

potential

Gulf of Thailand

Arthit 1.9TCF

Bohai Bay 7.35 Bboe

Carnarvon 95.5 TCF

East Kalimantan 47 TCF

Makassar Strait6 TCF

Kikeh 700 mmboe

Masela 10 TCF

Phu Khanh Basin

2.48Bboe

Shwe Gas Field

8 TCF

Browse 30.3 TCF

M9 Field, Gulf of

Martaban 1.76 TCF

Bonaparte29.5 TCF

Gippsland10.65 TCF

• Asia Pacific – a significant deepwater region

• Offshore Reserves Discovery Potential maximum off coasts of Vietnam and Indonesia

• APAC Offshore: More gas than oil

Source: Compiled by Frost & Sullivan

Offshore Projects – Australia

PyreneesFinancing arranged for

Pyrenees. The $1.7 billion development is

due to start up un early 2010. FPSO production

Angel Gas ProjectNorth West Shelf, WA

Water depth80mCapital expenditureA$1.6bn

No of wells: 3 Recoverable reserves1.85Tcf

of gas, 84Mmbbls of condensate

First gas: October 2008

Van GoghExmouth Sub-Basin, WAWater depth340-370m

First oil: 2Q, 2009No of wells: 10

Capital expenditure: About $560m. Estimated reserves in excess of 50Mmbbl

PlutoNorthern Carnarvon Basin, Water depth85m (platform);

1,000-400m (field)First Gas Late 2010No of wells: Initially 5

Capital expenditure: A$12bnRecoverable reserves: 5Tcf

FALLING oil prices are raising interest in Australia's liquefied natural gas sector as oil majors look to boost vital reserves they can no longer secure in areas like Canada's oil sands.

IchthysOperator: IPEXStart-up: 2012

A$8 billion

22 Overview of Offshore Projects in the Asia Pacific Region

Source: Dept of Industry & Resources, Western Australia; Compiled by Frost & Sullivan

Offshore Projects – Australia & New Zealand

MaariTaranaki Basin

First oil announced in March 2009.Number of Wells: 5

Expected Production: 50 MMboeCapital expenditure: $600 million

Kupe ProjectTaranaki Basin, North Island,

New Zealand Water depth35m

First GasMid-2009 No of wells: 6

Capital expenditure about $730m

Gorgon Field Development: The long-delayed A$50 billion Gorgon LNG project, potentially the

nation's biggest development yet, is picking up steam, with operator Chevron labeling it the company's top 2009 priority.

Project start-up: 2014

BrowseOperator: Woodside

Start-up: 2012A$11.2 billion



Offshore Potential – Vietnam

Phu Khanh Basincovers about 56,000km2.

Water depthin the area: 50-2500m.

Drilled: 2wells Estimated reserves: 2.48 Bboe

Tu Chinh- Vung May Basincovers about approximately 28 000km2

Water depth: 1000-1500m.Drilled: 1well

Estimated reserves: 6.3 Bboe

Producing fields: Bach Ho, Rong, Rang Dong, Ruby, Su tu den (Cuu long), Dai hung, Lan Tay (Nam Con Son), Bunga Kekwa - Cai Nuoc, Bunga Raya và Bunga Seroja (Malay), Su Tu Vang

Appraising and developing fields: Hai Thach, Rong Doi, Su Tu Trang (Cuu Long), Rong Đoi Tay (Nam Con Son), Kim Long, Ca Voi, Ac Quy (Malay)

Su Tu Vang (Golden Lion) started production in November 2008. $

1billion project cost. White Lion and Brown Lion fields scheduled to begin production between 2011

and 2016

Song Hong Basin: covers about 126,000km2

Water depth in the area: 20-800m. Drilled:>50wells (25 wells offshore)

Estimated reserves: 5.76 Bboe


Source: PETROVIETNAM; Compiled by Frost & Sullivan

Offshore - Malaysia

Deepwater/Ultra Deepwater to contribute major portion of undiscovered resources – 10 billion boe

Undiscovered potential: 65% of oil reserves and 45% of gas reserves in deepwater

Gumusut/KakapRecoverable: 620mboe

Depth: 1,100mOnstream: 2011/2012

Operator: Shell

MalikaiRecoverable: 108mboe

Depth: 480mOnstream: 2011/2012

Operator: Shell

KebabanganRecoverable: 2.2tscf

Depth: >200mOnstream: 2012/2013

Operator: KPOC

JangasRecoverable: 81mmboe


Operator: Murphy

Ubah CrestRecoverable: 215mmboe


Operator: Shell

PisanganRecoverable: 56mmboe


Operator: Shell

KamunsuRecoverable: 2.2tscf


Operator: KPOC


Source: PETRONAS; Compiled by Frost & Sullivan

Offshore Malaysia – Deepwater Areas Doubled

Source: PETRONAS


Malaysia’s reserves from the deepwater areas has doubled over the past five years

Offshore - Indonesia

Deepwater Potential: Major Gas discoveries in Kutei basin; exploration in the Tarakan and Papalang basin

Thrust from Government for faster development of gas projects for meeting domestic and export gas demand

East KalimantanMasela Block

10 TCF Reserves at depth of 4000 m

Inpex to invest $14.5billionProposal for floating LNG plant with production start-

up in 2016

Makassar StraitGehem, Gendalo, Gandang, Maha and Bangka fields

Chevron committed to developing East Kalimantan deepwater fields, Gehem and Gendalo.

To invest $ 6 billion. BP MIGAS: No proposal as of now to review this project


Source: Planning Dept, Govt of Indonesia; Petroleum Geo-Services ; Compiled by Frost & Sullivan

Offshore – Thailand

Chevron Corp. and its partners will construct the Platong Gas II natural gas project in the Gulf of ThailandTotal development cost of the field is $3.1 billion with startup scheduled for 1Q 2011

The Platong Gas II development, located in shallow water, 120 mi (200 km) offshore, is designed to add 420 MMcf/d of natural gas processing capacity

Salamander Energy Bualuang Oil ProjectGulf of Thailand, ThailandOperator: Salamander Energy Gulf of Thailand,Water Depth About 60mReserves: 20MMboeFirst Oil was in August 2008

Bongkot North field in the Gulf of Thailand is entering another development phase. Production planned in 2010

Coastal Energy has approval for development of the Songkhla field in the Gulf of Thailand.

The approval also covers several surrounding satellite features. The extended production area is significant in that it enables the company to fully exploit the prospects surrounding the primary Songkhla development


Source: News reports; PTT PLC; Compiled by Frost & Sullivan

Arthit (Blocks B15A & B16A)

Offshore – Cambodia and Myanmar

Cambodia Potential Reserves: 2 Bboe

Chevron to delay development of Cambodia field due to weak oil prices.

Chevron will delay the development of Block A offshore southwest Cambodia due to weak oil prices, according to the country’s Secretary General of Economy and Finance.

Chevron has completed exploration work on the acreage and could kick off first production in 2012 if it started development work now. Production will most likely start in 2014 or 2015 if Chevron decided to wait until the global economy recovers fully.

Shwe Gas FieldMyanmarReserves: 8 TCFGas Supply to China through pipelineThe project is expected to start supplying gas in 2013


Source: News reports; Compiled by Frost & Sullivan

Pearl River basin Husky Energy

Liwan 3-1-1, Block 29/26

Panyu Gas FieldStarted

production March 2009

Liwan 3-1-1Pearl River Mouth Basin

Water Depth Average 1,300mFirst Gas Planned for 2012/13Reserves estimated at 4-6Tcf

OperatorHusky EnergyPartnerChina National Offshore Oil

Corporation (up to 51 per cent working interest)ContractorsChina Oilfield Services (3D seismic

survey), Seadrill Offshore AS (semi-submersible drill rig)

Offshore – China

Production begun in Jan 2009 from Platform B, part of Peng Lai (PL) 19-3 blocks' Phase 2 project in China's Bohai Bay.

Platforms D and E are expected to come online later in 2009

ConocoPhillips is the operator of PL 19-3, which is currently China's largest offshore oil field. CNOOC holds a 51 percent

interest in the PL 19-3 block



Offshore - India

70% of offshore acreage is in deepwater

Dhirubhai 1 FPSO commissioned Aug 2008.

Dhirubhai 2 & 3 to follow in 2010 and 2011 respectively

NELP VIII bidding postponed to mid-April. Limited number of

blocks may be on offer due to perceived lack of response from

the market

MA-D6

Bay of BengalArea8,100km²

BlockKG-DWN-98/l (KG-D6)Basin Krishna-Godavari basin

Water Depth700m (2,297ft) to 1,700m (5,577ft)Total reserves about 14,000bcf of gas and about

140m barrels of oilTotal investment About $10bn

Production of crude oil started in September 2008 from the block’s MA field, while production of gas

from the Dhirubhai-1 and Dhirubhai-3 fields is scheduled to start by mid 2009.

Reliance is carrying out conceptual studies for the development of another eight natural gas

discoveries near the D1 and D3 gas fields. The satellite discoveries are likely to be tied to the

production facilities for D1 and D3



Heera (B-38 & B-37-B)

Tapti South

Offshore Drilling and Completion Capex (US $M) by Country 2009 -2012


Source: Industry sources; Compiled by Frost & Sullivan

Country 2009 2010 2011 2012 2009-2012

Australia 240 400 300 375 1315

China 40 40 0 70 150

India 180 230 140 270 820

Indonesia 135 135 230 235 735

Malaysia 250 120 320 230 920

Philippines 30 60 70 75 235

Total 875 985 1060 1255 4175

Australia, India, Indonesia and Malaysia – large Investments in Drilling and Completion

0

200

400

600

800

1000

1200

1400

2009 2010 2011 2012

$ M

illi

on

Philippines

Malaysia

Indonesia

India

China

Australia

Energy Vessels – Market Cautious

• Oil companies throughout the world have been re-evaluating energy developments given a collapse in oil prices, which has made some projects uneconomic.

• Integrated Oil & Gas Companies are showing an increasing reliance on very large projects to replace the more diverse existing production base

• Demand still strong for E&P rigs and support vessels but market is getting to be cautious

• Reluctance to commit to additional new-builds. Market has seen a few cancellations

• Southeast Asia 2009 Scene:

• National Oil Companies have strategic interests that differ from listed companies

• Deficit of semi-submersibles

• Surplus of Jack-ups

Continued financial turmoil, prevailing low oil prices and economic recessions are impacting activity levels

The crisis is more widespread than the financial crisis that hit the oil price in 1998

Even if companies take a bullish outlook on a recovery in oil demand growth, falling revenues and a lack of credit will restrict their ability to invest in new projects

33 Outlook for Offshore Energy Vessels

Source: Frost & Sullivan

FPSO Distribution in Asia Pacific

Source: Mustang Engineering

DHIRUBHAI 1 – Aug 2008

INDIA (2)AKER SMART 1 (fTT Polar Alaska) – Jun 2008


FPSO – Field Operator Owned Vessels (Global)



FPSO – Contractor Owned Vessels (Global)



FPSO Deliveries – Global

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012Global FPSO Deliveries 10 8 8 12 16 13 8 8 9 10

0

2

4

6

8

10

12

14

16

18

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Nu

mb

er o

f F

PS

O D

eliv

erie

sOthers

Japan

South Korea

China

Malaysia

Singapore



Prospective FPSO Projects

Gendalo- Gandang

FPSOIndonesia

Crux Field Liquids Project FPSO

AustraliaFirst liquids by mid-

2011

Dhirubhai 2 & 3 FPSOs(India)

Shipyard: Jurong, Singapore

Chevron TexacoBlock A FPSO

(Cambodia)

Carigali Hess Early Gas Production Unit

(Malaysia)

Vietsovpetro FSO-6(Vietnam)

Premier Blackbird & Dua FPSO(Vietnam)

KEI Kangean FPSO(Indonesia)

INPEX IchthysFPSO/FSO(Australia)


Source: MODEC; Compiled by Frost & Sullivan

LNG FPSOs


Demand for LNG Increasing Globally

Number of large-scale gas fields have been decreasing

Exploration has turned to small and medium sized fields

So far, it has been generally unprofitable to develop smaller gas fields using traditional methods

LNG new-build contracts decreasing

Around 2,400-plus small- and medium-sized gas fields with the estimated reserves of around 100 million tons


LNG FPSOs


The LNG-FPSO is expected to improve profit margins for developing smaller fields

Ship owners and ship builders more interested in LNG-FPSOs

LNG-FPSO to become shipbuilding industry’s main product and a new growth engine

Order forecast for LNG FPSO expected to surge. Up to 30 LNG-FPSOs could be ordered in 2009 – 2010

South Korean shipbuilders Hyundai, Samsung and Daewoo most likely to land these lucrative contracts

Only Samsung has so far received orders for the units.

In 2008, Samsung received orders for 4 LNG FPSOs from UK’s Flex LNG

This year it received an order for one LNG FPSO ($680m) from an European

Shipping Company Source: Frost & Sullivan

Jack-up Drilling Rigs

39

45

2008 2009

Average Number of Contracted Jack-ups

Lower demand in 2009: 12 Jack-ups surplus in the SEA Jack-up market; Up from 6 during 2008

Southeast Asia

Global New Building Forecast

0

5

10

15

20

25

30

35

40

Jack-Ups 36 25 1 0

2009 2010 2011 2012

Existing Fleet (Upto End 2008)

445


Near Term Jack-up market remains uncertain


Semi-submersibles

SEA to experience more demand than supply for Semi-submersibles

Average deficit of 4 to 5 Semi-submersibles in the SEA region throughout 2009

Southeast Asia

Depth > 4000 Ft

Number of Deepwater Semis: 82


0

5

10

15

20

25

Semi-Submersibles 25 10 9 6

2009 2010 2011 2012



178


Drill Ships

Major Driver: New gas discoveries in the region have necessitated deployment of deepwater drilling equipment

Southeast Asia

Depth > 4000 Ft

Number of Deepwater Drillships: 37

0

2

4

6

8

10

12

14

Drill Ships 8 14 14 7

2009 2010 2011 2012


43




Offshore Support Vessels

Global Fleet

0

500

1,000

1,500

2,000

2003 501 1,499 508 926 438 239

2004 518 1,556 516 955 451 240

2005 551 1,616 525 1,020 450 240

2006 582 1,673 534 1,101 468 243

2007 615 1,753 549 1,199 489 246

2008 656 1,897 559 1,340 551 251

Crew / Supply Vessel

PSV OSV AHTSSupport/safety

Pipe Lay



PSV – Platform Supply Vessel

OSV – Offshore Tug/Supply Ship


Global Shipyard Deliveries

0

50

100

150

200

2009 25 61 7 157 37 3

2010 39 79 8 97 40 8

2011 33 75 6 55 33 7

2012 46 81 7 41 24 5

Crew / Supply Vessel

PSV OSV AHTSSupport/safety

Pipe Lay



PSV – Platform Supply Vessel

OSV – Offshore Tug/Supply Ship


China Shipyard Deliveries: As a Percentage of Global Shipyard Deliveries (2009 – 2012)

Platform Supply VesselChina12%

Others88%

Offshore Tug/Supply Ship

China50%

Others50%

AHTSChina16%

Others84%

Support/SafetyChina4%

Others96%

Pipe Lay

China48%

Others52%



Crew Supply Vessel

China3%

Others97%

44 Conclusion

• Growing regional awareness of the strategic importance of offshore resources

• Australia, Indonesia, Malaysia and India have substantial development projects for the period 2010 – 2014

• More deep water projects

• National Oil Companies have strategic interests that differ from listed companies

• Impact of Financial crisis on offshore vessels market: •Reluctance to commit to additional new-builds. Market has seen a few cancellations

• Deficit of semi-submersibles and surplus of Jack-ups in 2009• Near Term Jack-up market remains uncertain

• LNG FPSO to become shipbuilding industry’s main product and a new growth engine• Around 2,400-plus small- and medium-sized gas fields

• Leading Shipyards: FPSOs - Singapore; OSVs - China; LNG FPSOs – South Korea

FROST & SULLIVAN

A GLOBAL GROWTH CONSULTING COMPANY

outlook for offshore oil & gas exploration and production projects and offshore energy vessels

Business

gas production

gas consumption

major gas exporters

asia discoveries

natural gas exploration

natural gas reserves

natural gas opportunities

cubic meters of gas