Southeast Asia’s oil and gas EPC market is estimated to register a CAGR of around -2. 04% during 2021-2026, valuing USD 38. 60 billion in 2026 compared to USD 42. 74 billion in 2020. With the COVID-19 pandemic in 2020, the market witnessed a significant negative impact.
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For instance, Indonesia postponed its six oil & gas bidding rounds, and companies like Petronas delayed its Kelidang cluster in Brunei and Malaysia. The increasing share of natural gas in the energy mix is expected to be a primary driver for the growth of EPC market in many emerging markets in Southeast Asia. On the flip side, players continue to face a myriad of challenges, which result in lengthy development times of up to 12 years for deepwater projects and are likely to restrain the EPC market in the region.
The downstream segment is estimated to account for the largest share in the Southeast Asian oil and gas EPC market in 2020. The segment has been undergoing major upgrades in the existing refineries and petrochemical complexes.
Countries, such as Brunei, Vietnam, and Burma, have enormous potential for the oil and gas industry across all the three sectors, namely, upstream, midstream, and downstream. This is likely to act as an opportunity for the Southeast Asian oil and gas EPC market.
Indonesia is expected to dominate the Southeast Asian oil and gas EPC market, in 2020, owing to a large number of new refineries being constructed.
Key Market Trends
Downstream Sector to Dominate the Market
Southeast Asia is home to some of the fastest-growing economies. The cumulative population is expected to grow by as much as ~13% by 2030, with the region’s GDP more than doubling in the same period.
This means that irrespective of the drive toward sustainability and non-fossil fuel based transport, the demand for energy is expected to rise sharply in the region, and demand for goods derived from chemicals is expected to be a driver of demand for refined oil and gas products, which are products of the downstream oil and gas industry.
According to BP Statistical Review of World Energy 2021, Singapore had the largest refining capacity of 1,514 thousand barrels daily, as of 2020, followed by Thailand, Indonesia, Malaysia, Vietnam, and other South-East Asian countries.
Southeast Asia has been witnessing an increasing amount of investments in the oil and gas downstream industry, with Indonesia, Malaysia, and the Philippines being the fueling regional hotspots.
With several downstream projects like the Pengerang Energy Complex and Sipitang Oil & Gas Industrial Park (SOGIP) in countries like Malaysia, the sector is expected to have significant growth during the study period.
Indonesia is Expected to Dominate the Market
As of 2020, Indonesia’s proven oil reserves stood at 2.4 billion barrels, and the proven gas reserves stood at 44.2 trillion cubic feet. Along with this, it has a diverse geographical profile. The geological basins comprise 60 sedimentary basins, including 36 in Western Indonesia that have already been thoroughly explored, out of which 14 produce oil and gas. Substantial oil and gas reserves increase the country’s exploration and production activities, which is likely to stimulate the EPC operations during the forecast timelines.
In the recent past, the upstream industry of Indonesia failed to meet even the domestic refining capacity. Also, the country’s demand for refined products exceeds domestic refining capacity. These factors indicate the need for the development of the upstream and downstream sectors.
In 2020, SKK Migas finished the longest 2D Seismic Survey in Jambi Merang KKP. The Jambi Merang Contract Area survey was started with a length of 31,908 km in November 2019, and its last acquisition was completed in August 2020. The survey covered 35 basins from 128 basins in Indonesia, consisting of six producing basins, seven discovery basins, five explored basins, and 17 other basins constituting new or unexplored basins that have never been explored.
Besides, the EPC market for the midstream industry is also expected to register significant growth. With a large number ofconstruction and upgradation projects for refining and petrochemical plants, the demand for the oil transportation infrastructure is growing, which, in turn, is expected to drive the EPC market for oil pipelines during the forecast period.
Further, the Indonesian government announced its plans to more than double the refining capacity during 2018-2025 to reach 2.2 million barrels per day. As a result of these policies, major refinery and petrochemical plant construction and upgradation projects are upcoming and are in the pipeline.
The Southeast Asian oil and gas EPC market is fragmented. The major companies in the market are TechnipFMC, Samsung Engineering, Indika, Fluor, Bechtel, Saipem, Petrofac, BarataIndonesia, JGC Indonesia, among others.
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