South-east Asia looks set to usurp Australasia as the focus of oil and gas mergers and acquisitions in the region this year, with consultancy Wood Mackenzie touting a possible $US14 billion ($20 billion) of deals as the US and international oil companies are drawn to more compelling opportunities elsewhere.
Already Asia-Pacific M&A activity has had a strong start this year, with $US2.8 billion of transactions announced in the March quarter, headed by Murphy Oil’s $US2.1 billion sale of its Malaysian business to Thailand’s PTTEP, Wood Mackenzie said.
It estimated more than 5.4 billion barrels of oil equivalent of assets, mostly natural gas, may come to the market in the Asia-Pacific region this year.
Efforts by national oil companies in the region, such as Indonesia’s Pertamina and PTTEP, to maintain domestic supply are also expected to drive deal-making as they bring in technical and financial partners to manage expanded portfolios.
The forecast of a busier year in Asian oil and gas deals comes as?Chevron’s agreed $US50 billion takeover of Anadarko Petroleum?has been thrown into uncertainty by?a hostile counter-bid for the target by Occidental Petroleum.
Should Occidental win Anadarko, the target’s LNG project in Mozambique is expected to be among $US10 billion-$US15 billion of divestments by the combined company. The agreed Chevron-Anadarko tie-up has meanwhile triggered?speculation about the future of some Chevron interests in Western Australia.
Last year the value of transactions in upstream oil and gas in the Asia-Pacific region surged to $US8.7 billion, the highest since 2014 and accounting for more than a third of the global spend, excluding North America. Activity was boosted by a reshuffling of portfolios in Australia and New Zealand, accounting for 78 per cent of the regional total, Wood Mackenzie said, noting $US4 billion of assets sold by the majors in the region. Gas assets accounted for 94 per cent of the deal spend.
Local deals last year included?Santos’ $US2.1 billion acquisition of Quadrant Energy,?the completion of Origin Energy’s $US1.585 billion takeover of Lattice Energy?and Woodside Petroleum’s $US744 million buyout of ExxonMobil from the Scarborough gas field, while in New Zealand,?Shell sold its business to Austria’s OMV for $US578 million.
Activity in 2019 has continued apace into this June quarter, with the completion last week of $US650 million of?sales by ConocoPhillips and Shell of their stakes in the Woodside-led Sunrise gas venture?in the Timor Sea to the Timor-Leste government, which?may sell on some interests in the venture.
Woodside meanwhile is looking to seal deals this year?to bring partners into its Scarborough gas and Pluto-2 LNG ventures in Western Australia, stirring speculation that?Saudi Aramco may be among potential co-investors.
Wood Mackenzie research director Andrew Harwood said the firm had observed for a while now the trend of oil majors exiting countries in south-east Asia as their portfolios matured and contracts expired.
Mr. Harwood said that although the bears’ view would be that there was a smaller universe of potential buyers, “we think regional NOCs [national oil companies], Middle Eastern operators and regional specialists continue to be active players shoring up assets in south-east Asia”.