The Southeast Asian oil and gas downstream market is expected to register a CAGR of less than 4.54% during the forecast period of 2020 – 2025.
- Factors, such as increasing demand for oil and natural gas and increasing foreign direct investment are expected to boost the need for the Southeast Asian oil and gas downstream market during the forecast period. However, with the advent of reliable and cheaper renewable energy, more investment may not be focused upon refineries.
- An increase in refining capacity is taking place in the region, with Singapore having the largest refining capacity in 2018. The countries in the region of Southeast Asia are heavily dependent upon the imports of natural gas and oil. Refining the oil and natural gas is expected to reduce the additional amount paid to the refiners abroad.
- Countries in the region are eagerly finding and trying to produce the oil and natural gas reserves. It can become an opportunity for many of the refineries as the cost of importing would reduce.
- The Vietnamese downstream indsutry is expected to substantially grow in the forecast period. Increasing consumption in the country is a major reason for the growth in the sector. Constrcution and expansion of refinieries are, also, taking place which is expected to provide boost to the growth in the market.
Key Market Trends
Refining Capacity to Witness Growth
- The refining capacity in the region increased by 4.18% to 5,128 thousand barrels daily, in 2018 to 4,922 thousand barrels daily, in 2017. The total primary energy demand of Southeast Asia, in 2018, was met 379 million ton of oil equivalent (Mtoe) with oil and gas. Oil and gas is expected to further meet the demand with an increase to 459 Mtoe in 2025.
- In 2019, new expansion projects were taking place in the region like, Hyundai Engineering won a 273 million USD EPC contract from Bangchak Corporation for a refinery expansion in Thailand, Samsung Engineering was awarded a USD 790 million EPC contract from PTT Global Chemical. In Malaysia, Jacobs Engineering Group won two contracts from Hyundai Engineering to upgrade an oil refinery. Expansion projects are taking place in almost all the countries of the region.
- In 2018, state-owned Myanmar Petrochemical Enterprise (MPE) is planned to build a new oil refinery near an existing state-run facility in Magwe Region, Myanmar. The capacity of the refinery is 2 million tonnes per year. The refinery is expected to increase the refining capacity in the Myanmar.
- Hence, the refining capacity is expected to witness growth due to the increase in demand for oil and the expansion and construction of refineries.
Vietnam Downstream to Witness Growth
- The country has been long dependent upon the import of refined oil from countries, like India and China, that have a robust downstream sector. To reduce the dependence upon refined oil imports and to supplement the growing Vietnamese upstream industry, the Government of Vietnam, in 2019, initiated further expansion of the downstream industry.
- In 2019, the 200,000-barrel per day (bpd) facility, owned by Nghi Son Refinery and Petrochemical LLC, started refining at full capacity. The refinery is expected to massively reduce the imports of refined oil to the country.
- In 2019, Vietnam’s state-owned PetroVietnam is pursuing the development of its Long Son refinery, which is expected to have a capacity of 200,000 barrels a day, producing liquefied petroleum gas and petrol related products. The project is in proposal stage and may make the country wholly dependent on its own refineries for refined oil.
- In Vietnam, oil production decreased by 9.1 % to 13.0 million ton (MT) in 2018 from 14.3 MT in 2017. Consumption of oil increases to 24.9 million ton of oil equivalent (Mtoe) in 2018 from 23.6 Mtoe in 2017. Increasing demand and increase in production of oil are boosting the growth in the market.
- Hence, the Vietnamese downstream industry is expected to witness substatial growth in the forecast period. New proposed agreements and expansion in the refineries and petrochemical plants are expected to be a prominent driver in the Vietnamese downstream industry.
The Southeast Asian oil and gas downstream market is moderately consolidated. The major companies include Petroliam Nasional Berhad, Royal Dutch Shell PLC, Exxon Mobil Corporation, PT Pertamina, and Vietnam Oil and Gas Group.
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