APPEC: Asian upstream players to focus on oil, gas producing assets amid energy transition

Asian upstream players will prioritize purchasing stakes in oil and gas producing assets amid pressure for shorter-term returns alongside uncertainties over the global energy transition, industry executives said during a panel discussion at S&P Global Commodity Insights’ APPEC 2024 conference in Singapore.

“Because of the energy transition, there is a scramble for developing countries discovered resources because everybody wants to see that discovered oil should be put to production as early as possible. Otherwise, a large volume of that will always remain in the ground,” India’s ONGC Videsh’s finance director Anupam Agarwal said.

This comes as the energy transition is expected to dent demand for conventional fuels in the future, although there is still uncertainty over when this inflection point may occur, Agarwal added.

“We are working in international areas to update our assets. Our focus, in view of the energy transition, we are not looking at the long gestation projects. So, exploration is not a priority right now for us, except for the projects which are already here,” said Agarwal.

ONGC Videsh, a subsidiary of Oil and Natural Gas Corporation Ltd, has stake in 32 oil and gas projects in 15 countries.

Similarly, smaller players like MedcoEnergi have seen opportunities to swoop up producing assets in Southeast Asia in recent years, as Western companies continue to rationalize their portfolios and divest on assets in the region.

This comes as the region had seen several high profile exits in offshore blocks by Western majors, such as Indonesia’s Masela block.

“We’ve grown quite fast in the last few years, and we've done so mainly through acquisitions, acquisition of producing assets in this region,” said MedcoEnergi’s CEO Roberto Lorato.

“There are still more opportunities in the region, available or to become available soon. Maybe one or two billion barrels of oil equivalent have been rumored when we speak for potential M&A (merger and acquisition) activity.”

This comes as Indonesia – where MedcoEnergi is based in – is looking to meet a 2030 production target of 1 million b/d of oil and 12 Bcf/d of gas, as it combats its declining output while grappling with a rising domestic demand.

The country is expected to miss its output targets for this year, and had lowered its 2025 production project by 4%.

“We are all in transition. We are all working very hard to adapt to the new reality. But the oil industry is not dying, it is in transformation, transition, but it's not dying. It's not going to die anytime soon,” said Lorato.