OIL AND GAS EXPLORATION: Asia firms look further afield
2003-7-18THE NATION
    With Thailand’s PTT Exploration and Production Plc spreading its wings as far afield as Algeria, other Asian upstream oil and gas companies are embarking on a massive drive to expand their business interests overseas.
    The main factor behind the expansion is the growing deficit of energy supply in the region, says Charles Chang, associate director for corporate affairs in Asia of Fitch (Hong Kong) Ltd.
    Enhanced fund-raising capabilities are another major driver of the push to go international, he said.
    "What you’re seeing happening in Asia, as a result of a convergence of factors including the resumption of growth and the increasing imports of oil and gas from outside the region, is that the upstream players have returned to the capital market and a shift to become more international players."
    Chang cited Malaysia’s Petronas and China’s CNOOC as among the leading Asian oil and gas exploration companies that are aggressively expanding internationally.
    "China is happy to have its E&P [exploration and production] firms acquiring upstream assets overseas. China now imports 30 per cent of its oil. And this will increase to 50 per cent in five years."
    Chang said the move to invest abroad move would add to the credit risks of Asian E&P companies, and noted that these companies are unlikely to the enjoy similar privileges they have at home when applying for petroleum rights.
    Chang was speaking in an interview with The Nation during Fitch (Thailand)’s annual conference last week.
    The growing popularity of natural gas as a fuel choice is another trend that is helping regional oil and gas companies, Chang said.
    Unlike oil, of which two-thirds of the world’s reserves are concentrated in the Middle East, gas is more equally distributed with the Asia-Pacific having 8 per cent of the world’s supply. Sharp growth in gas consumption has been seen particularly in South Korea, Malaysia, Indonesia, Thailand, and more recently in China, he said.
    "Despite the recent rapid growth in gas consumption, Asia still accounts for only 8 to 9 per cent of the world’s gas consumption. However, we believe this will change in the next 5 to 10 years."
    The Asia-Pacific now imports 9 per cent of its gas needs from outside the region. And this will certainly grow in the future, he said. In the aftermath of the second Gulf war, there has been a "re-awakening" in the US over the reliance on oil, especially from the Middle East.
    Chang said a shift towards gas in the US - the world’s largest oil consumer - would have a significant impact on the global energy market.