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Up to 2020, Asia-Pacific faces a decline in oil output but is this a permanent trend? Regional production will decrease by over 1 million b/d by 2020, equalling an overall annual decline rate of around 4%. The fall will be greatest in China — followed by Indonesia, Thailand, India and others.
Falling fast: Asia-Pacific to lose 1 million b/d by 2020
Angus Rodger, Research Director, Asia-Pacific, discusses the future of oil production for Asia-Pac.
Capital cuts by the Chinese NOCs, shifting government policies and oilfield maturity are the key factors in accelerating the decline in China's liquids production. A rising oil price might encourage more spend, but this will not change regional fundamentals, and we expect companies to prioritise finances over marginal oil output.
From the NOC perspective, shutting-in uneconomic oil fields is offset by a growth in gas output through to 2020, which will lift revenues and relieve the need to re-start marginal oil wells. However, whether the Chinese NOCs continue to prioritise value over volume — and at which point the government in Beijing feels national output has fallen 'enough' — are the key questions going forward.