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For more than 100 years Asia played a fundamental role in the growth of the Majors. Could this finally be coming to an end? Ambitious divestment targets are at the heart of most of the Majors' business plans for the next 12 to 18 months. With nearly US$40 billion of commercial value tied up in mature and mid-life assets across Asia, we believe big moves are on the table.
And while global sales so far have focused on mid- and downstream operations, an oil price stabilising around US$50/bbl could provide the stagnant international upstream market the necessary push to get M&A deals flowing, too.
Signs are beginning to point to portfolio-slimming being underway, with Shell reviewing its US$1 billion New Zealand portfolio, and data rooms open for Chevron's position in Myanmar, Total in Brunei, and parts of ExxonMobil's operations in Australia's Bass Strait.
Given their advantaged positions, NOCs are expected to be the most active buyers. Although M&A activity at the ‘bottom’ of the market has been limited so far, this will change.
Angus Rodger
Vice President, SME Upstream APAC & Middle East
Angus leads our benchmark analysis of global Pre-FID delays, and deep water developments.
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Our most recent research estimates a 22% decline in Asia-Pacific production (excluding Australia) for the majors by 2020, dropping to 1.8 million barrels of oil equivalent per day (boe/d).
Who will invest in mature but still-commercial assets, and how will it affect the Majors' host governments if they sell?