by Chee Yew Cheang, APAC Editor
While the doldrums facing the petroleum sector had led some industry watchers to downgrade the significance of this year’s Offshore Technology Conference (OTC) in Houston, a couple of Southeast Asian oil and gas producers traveled thousands of miles in search of investments for their countries.
Vietnam, Indonesia Seek Investments
The OTC drew a fairly high-powered delegation from Vietnam, which was keen to showcase the Southeast Asian country as an attractive investment venue for the oil and gas industry. The call comes at a time when industry activity is slowly down in Vietnam, one of the largest hydrocarbons producer in the region, after Indonesia and Malaysia.
Drilling activities in Vietnam had fallen in tandem with the decline in oil prices, President and CEO of PetroVietnam Drilling and Well Services Corp. (PV Drilling) Pham Tien Dung told Rigzone on the sidelines of an industry session on Vietnam at OTC.
“This year, probably fewer wells will be drilled compared to last year. In terms of percentages (of wells to be drilled), that will depend on the top management in PetroVietnam. From what we can see, (drilling activity) has fallen by around 30 percent. We don’t have the official number yet,” he commented.
Drilling day rates have tracked the downtrend in oil prices, which have impacted negatively on PV Drilling’s revenues.
“I hope it won’t drop further because we are drilling contractors. That (oil) price level should be the bottom and should start picking up. But I know now it is quite bad. Close to $100,000 a day is bad, especially for the new generation rigs. For the time being, we will see how the market goes. Watch the movement on the oil prices,” Pham explained.
U.S. West Texas Intermediate oil futures traded around $59 to $61 a barrel in the first week of May, while global benchmark Brent oil futures exchanged hands at $65 to $68 a barrel in the same period.
“What we know from the operators (in Vietnam) is that they preferred to have oil price at more than $70 a barrel. That will make the project feasible.”
Despite the slowdown in drilling activity offshore Vietnam, the PV Drilling top executive believed this is unlikely to be a permanent development.
“In Vietnam, we need to have exploration and production drilling because we must increase our (petroleum) production rate. More exploration wells need to be drilled to find more reservoirs, more reserves, also we have to drill more production wells to bring up the national production rates.
Vietnam definitely has a need to tap its domestic oil resources, estimated by the U.S. Energy Information Administration (EIA) to hold 4.4 billion barrels in 2014, as it remains a net importer. The country produced around 298,360 barrels of crude oil per day last year, while domestic consumption stood at 471,000 barrels per day.
To help realize this objective, PV Drilling indicated that a part of its long-term plan is to expand the company’s drilling fleet to 10 rigs.
“We love to expand our fleet, but I don’t think this is the right time to do that. Now there is surplus in the world, too many rigs idled, too many rigs in the shipyards not completed yet. So we have to watch,” CEO Pham told Rigzone, adding that the firm has a preference for rigs built by Singapore’s Keppel FELS.
“We preferred to have the same design from the same shipyard (Keppel FELS), so it is much easier to maintain the operations.”
Like its Southeast Asian neighbor Vietnam, Indonesia was on a mission to encourage investment in the country’s petroleum sector.
IGN Wiratmaja Puja, acting director general of Oil & Gas in Indonesia’s Ministry of Energy and Mineral Resources told OTC participants that upstream investment opportunities exist in the country. There are 22 unexplored basins in Indonesia, with 14 currently under exploration and 16 in production. The former OPEC member needs around $89.7 billion in petroleum investments over the next decade, comprising $57.28 billion for oil and $32.42 billion for gas, the MEMR official said.
Meanwhile, Indonesia offered to host OTC Asia – with the event scheduled to be held in Malaysia next year – in Bali, which Wiratmaja Puja described as a “heaven on earth.”
Business as Usual at OTC
Looking back at the OTC, a double-digit decline in attendees at one of the world’s major petroleum event could be considered a setback for the organizers.
But is this really the case? It depends on how one perceived the value of the annual event as a “forum to exchange ideas and opinions to advance scientific and technical knowledge for the safe, environmentally friendly and sustainable development of offshore oil and gas resources”.
True, attendees at this year’s OTC shrank 12.6 percent to 94,700 compared to 2014’s 108,300, but companies exhibiting increased to 2,682 in the same period, up 4.4 percent from 2,582. Perhaps, participants, whether individual or company, believed that OTC is an essential platform for getting the latest developments on the offshore petroleum sector from leaders in the industry, government and academia.
Rigzone provided coverage of several sessions at OTC, ranging from traditional exploration and production topics to human resource issues facing the oil and gas industry in the current market downturn. One of the topics concerned emerging industry leaders, with Baker Hughes Inc. Chairman and CEO Martin Craighead advising attendees at a Young Professionals in Energy (YPE) event during OTC to embrace change and unconventional wisdom given the cyclical nature of the business.