KUALA LUMPUR (March 28): Malaysia is among the hotbeds for upstream mergers and acquisitions (M&A) in Southeast Asia over the next two years, according to Oslo-based Rystad Energy.
In a statement on Monday (March 27), the firm said the bulk of these US$5 billion (RM22 billion) opportunities in Southeast Asia are in Indonesia, where upwards of US$2 billion of assets are on the market, followed by Malaysia and Vietnam which have approximately US$1.4 billion and US$1 billion for sale respectively.
Rystad said about US$700 million of deals have already been completed in the region so far in 2023, the strongest start to Southeast Asia’s upstream M&A activity since 2019.
It said that of all the assets up for sale, 74% are in the pre-final investment decision stage, 21% already in production, and the remaining 5% or so already under development.
The firm said that combined, they represent some four million barrels of oil equivalent (boe) in resources and around 270,000 boe of daily production with a gas-to-liquids ratio of 63:37, a lucrative proposition for prospective investors.
Rystad vice-president of upstream research Prateek Pandey said there is a lot of money changing hands in Southeast Asia right now.
The sheer magnitude of the oil and gas deals in the region will reignite the sector, reducing reliance on national oil companies and major players that has developed in recent decades.
“Southeast Asia presents an excellent opportunity for upstream players looking to strengthen their hydrocarbon portfolios,” said Pandey.
Rystad said fiscal and regulatory frameworks play a significant role in encouraging M&A activity, helping to attract buyers and secure deals.
It said the administrative updates that Malaysia, Indonesia and Thailand have implemented in recent years are boosting interest from energy majors and other new regional buyers as these countries benefit from successful exploration results.
Other countries in the region — such as Vietnam and Cambodia — are looking with envy at their neighbours and trying to enact similar processes to attract investments and deals.
As a result of this fiscal loosening, Rystad said a host of diverse oil and gas players are looking seriously at Southeast Asia as a pillar of their portfolio expansion plans.
Rystad said in terms of the total oil and gas resources on offer, Indonesia leads with a 50% share, followed by Malaysia with 24% and Vietnam with around 20%.
The firm said given the significant size of resources on offer from Indonesia, it is also the leading country in terms of the total deal value of resources on offer at around US$2 billion, followed by Malaysia at around US$1.4 billion.
Based on recent upstream transactions in Southeast Asia, the average production metric stands at between US$17,000 and US$20,000 of daily production and between US$2 and US$3 per boe of resources.