Eggs for sale at the Tan An wholesale market in Ninh Kieu District, Can Tho City, Vietnam, on Thursday, April 25, 2024. Vietnam’s consumer prices rose at the fastest pace in 15 months in April amid higher oil prices, adding pressure on policymakers to keep interest rates restrictive. Photographer: Linh Pham/Bloomberg
HANOI: A decade after its peak, the oil and gas industry is seeing a new investment boom with exploration and production (E&P) activity heating up again globally.
The upstream oil and gas sector has witnessed a resurgence of investment activity over the past few years, according to data from the US Energy Information Administration (EIA).
After hitting a floor in 2020, upstream investments increased by 11% in 2022 and grew another 7% in 2023. The upward trend in upstream oil and gas investment is expected to continue into 2024.
The renewed investment surge is particularly prevailing in North America, where favourable market conditions and technological advancements are driving a significant inflow of capital.
Similarly, countries in the Middle East and Asia are also ramping up their E&P investments to meet growing domestic energy demands as well as export commitments.
In South-East Asia, the upstream oil and gas sectors in Malaysia and Indonesia are poised for further investment and expansion.
In Malaysia, PETRONAS is ramping up its upstream spending, with a focus on growing E&P activities to boost domestic oil and gas output.
Earlier this year, Malaysia awarded seven new production sharing contracts covering six exploration blocks and one resource exploration opportunity.
PETRONAS estimates these deals will generate over RM1.3bil in investment for exploration work.
Indonesia has also outlined ambitious investment plans for its oil and gas industry. The country intends to invest US$17bil in the sector in 2024, a 29% increase compared with 2023.
This capital inflow is aimed at boosting Indonesia’s oil and gas production capabilities, with the plan to drill around 930 wells in 2024, up from 790 wells the previous year.
In Vietnam, E&P projects have been lacking since 2014 due to the plunging and prolonged low prices for crude oil, making new oil and gas development projects economically unviable.
However, with the recovery of crude oil prices, the Vietnam Oil and Gas Group (PetroVietnam) is planning to invest around 49.2 trillion dong this year, up nearly 57% from last year. Over 25.7 trillion dong will be invested in the upstream sector.
The renewed upstream investment by PetroVietnam and its subsidiaries signals Vietnam’s efforts to ramp up oil and gas production capabilities amid the recovery in global energy prices, aiming to boost the country’s domestic energy supplies.
PetroVietnam Technical Services Corp (PTSC) plans to invest over 1.8 trillion dong in 2024, 4.4 times more than 2023. During the first quarter of the year, it invested 301 billion dong.
PetroVietnam Exploration Production Corp (PVEP), a subsidiary of PetroVietnam, is leading the investment plan for 2024, with over 20.6 trillion dong. PVEP will dedicate resources to develop activities at various key oil and gas projects.
Meanwhile, PV Drilling expects stable high oil prices will increase domestic and regional drilling and well activity, boosting demand for rigs and services.
It plans more than 2.6 trillion dong in investments this year, versus less than 50 billion dong in 2023.
The company plans to shift from buying new US$130mil rigs to acquiring used rigs for US$90mil, and spend US$19.8mil on equipment.
Vietnam’s major domestic oil and gas fields, exploited between the 1980s and 2015, are now being exhausted, however growing industrial and energy demand requires accelerating exploration and production.
Key upcoming projects like Lac Da Vang Cuu Long, Su Tu Trang Pha 2B, Nam Du-U Minh, and especially Block B-O Mon will provide substantial, stable work for upstream companies. — Vietnam News/ANN
