Southeast Asia Readies for Oil & Gas Boom

By Damon Evans and Luke King

Southeast Asia – led by Indonesia, Vietnam, and Malaysia – is poised to become a major hub for oil and gas logistics projects, with billions in investment set to fuel its growth.

From Issue 2, 2025 of Breakbulk Magazine.

Southeast Asia looks set to be an exciting market for oil and gas logistics projects in the coming years with billions of dollars of investment anticipated, particularly in Indonesia, Vietnam and Malaysia.

Some US$100 billion worth of offshore gas investments could be approved between 2024 and 2028, data from Rystad Energy shows. This would be more than double the US$45 billion worth of projects that took final investment decisions (FIDs) from 2014 to 2023 and reflects a “new wave of momentum” for Southeast Asia, noted the energy consultancy in a report.

“Southeast Asia finished 2024 on a high note, with over US$10 billion worth of greenfield projects sanctioned – a significant threefold growth from 2023,” Prateek Pandey, vice president of analysis at Rystad Energy, told Breakbulk.

Christophe Grammare, managing director of Singapore-based AAL Shipping, is also upbeat. “The outlook for oil and gas projects in Asia remains positive, driven by rising energy demand, economic growth and government support. Asia’s rapid industrialization and urbanization are fueling a significant increase in energy consumption, with projections indicating a two-thirds rise by 2040.

“This growing demand, coupled with the economic expansion of major markets like China, India and Southeast Asia, is prompting largescale investments in oil and gas infrastructure to support industrial activities and transportation needs.”

Grammare noted that, in the oil and gas market in general, sustainability is becoming an increasing priority, with the industry adopting measures such as carbon capture and storage (CCS) and investing in cleaner technologies to mitigate environmental impact. “This means that existing facilities are being further developed to meet new environment standards,” he said.

“For AAL, oil and gas will continue to be a significant part of our business in Asia, as the sector maintains strong demand for heavy-lift and project cargo services. With ongoing investments in infrastructure and government-backed initiatives creating a favorable environment for growth, the industry remains a vital pillar of the region’s energy landscape.”

Carrier Interest

Chinese-Polish Joint Stock Shipping Company Chipolbrok said it is “highly interested” in the oil and gas sector. “Despite the ongoing vast development of the renewable energy sector, we still see the importance of more traditional energy sources, which recently are being modernized. This gives us possibility to transport heavy-lifts used in the process,” a spokesperson for the line’s management team in Shanghai and Gdynia told Breakbulk.

On the subject of President Trump imposing tariffs or other trade barriers on China, the Chipolbrok spokesperson said: “We will have to wait and see whether the announced measures will have a lasting impact on trade flows. China plays a leading role in supplying other industrialized countries, so such penalties would represent a hindrance to global trade and would result in a painful backlash.”

Grammare stressed that, despite the growing momentum for renewable energy in Asia, many countries continue to invest in fossil fuel projects, particularly as governments prioritize energy security and economic stability. “Nations with abundant natural resources, such as Indonesia and Malaysia, still see fossil fuels as a key economic driver, leveraging their reserves for both domestic use and exports,” he said.

“Policymakers in the region are taking a balanced approach, hedging their bets between renewables and fossil fuels to ensure a steady energy supply while addressing environmental concerns. The transition to renewable energy is a complex process that requires substantial investment in infrastructure, technology and regulatory frameworks, making it a long-term effort rather than an immediate shift.”

Much of the present optimism around Asia’s oil and gas outlook can be attributed to two key projects – BP’s Tangguh Ubadari Compression project in Indonesia, and PetroVietnam’s giant Block B gas project in Vietnam.

Carbon Capture in Indonesia

In November, BP announced a US$7 billion investment decision for its Tangguh project, which aims to boost gas and LNG output, partly using carbon dioxide (CO2), while building a new carbon capture, utilization and storage (CCUS) business.

The project includes developing the as-yet untapped 3 trillion cubic feet Ubadari gas field to backfill Indonesia’s largest gas-producing facility — the 11.4 million ton per year capacity Tangguh LNG export plant. Enhanced gas recovery (EGR), using CCUS and onshore compression, will be implemented both to boost production and to partly decarbonize the Tangguh project, keeping the LNG plant pumping for decades.

Gas from Ubadari should start to flow in 2028, according to BP. The CCUS element is expected to start up two to three years later, a source close to the development told Breakbulk.

Following the FID announcement, Japan-based JGC said it had won a lump sum US$2.4 billion onshore engineering, procurement, construction (EPC) and installation turnkey contract to install onshore compression facilities at Tangguh.

The purpose of the integrated EGR/CCUS project is to separate the reservoir CO2 from the produced gas and reinject it back into the offshore Vorwata gas field for sequestration and EGR. Once completed, the EGR/CCUS part of UCC will have three injection wells, one offshore injection platform, one offshore CO2 pipeline and onshore facilities for CO2 removal, processing and compression.

JGC said that new units at the onshore LNG facility mainly consist of hydrocarbon compressors to boost natural gas pressure from the existing gas wells, EGR compressors to collect and compress acid gas from the existing acid gas removal unit, and a newly-built combined cycle power plant as well as associated utilities.

Italy’s Saipem and its local partner were awarded a US$1.2 billion contract covering EPC and installation for the offshore works. Saipem’s activities include the engineering, procurement, construction and installation of two wellhead production platforms, a wellhead platform for the re-injection of CO2, and approximately 90km of associated pipelines. The platforms will be fabricated locally in Karimun in Indonesia’s Riau Islands, close to Singapore. Karimun is Saipem’s largest yard worldwide and one of the largest in Southeast Asia.

Speaking to Breakbulk, Koichi Kaizu, logistics specialist at JGC, said the oil and gas sector would remain “a vital component of our business portfolio over the next decade.” He added: “We anticipate that several LNG projects will advance to FID and proceed towards realization. JGC’s focus encompasses leveraging digital technologies and implementing low-carbon and decarbonized technologies to ensure sustained growth in this core business area.”

Kaizu holds the view that Asia is comparatively less susceptible to any changes in energy policy in the U.S., though he said there could be some influence on the downstream energy supply chain.

“For example, Japan may need to manage additional LNG off-take from U.S. production. In terms of upstream activities, Japan might have to co-invest in the development of Alaska LNG. This does not mean that decarbonization efforts are being delayed, but it may extend the transition period to cleaner energy if these LNG off-takes are made on a long-term basis.

“It goes without saying that Trump’s policy outlook is unclear, and it is difficult to predict the next few years, based on his actions and statements since taking office.”

Vietnam’s Giant Gas Project

In March 2024, the Phu Quoc Petroleum Operating Company (PQPOC), led by PetroVietnam alongside its partners, Thailand’s PTT Exploration & Production (PTTEP) and Japan’s Mitsui, took FID on a giant gas project in Vietnam.

The US$7 billion Block B project consists of the phased development of Block B, 48/95 and 52/97, which are located in the shallow waters of the Malay-Tho Chu Basin, off the coast of the Ca Mau province. The blocks hold 3.95 trillion cubic feet of gas, equivalent to approximately 680 million barrels of oil.

In December, a consortium of McDermott and PetroVietnam Technical Services Corporation (PTSC) started building the central production platform that has a design capacity of 490 million cubic feet per day of gas and 20,000 barrels per day of condensate. It is being fabricated locally in Vietnam. The McDermott-PTSC consortium won a deal worth over US$1 billion for engineering, procurement, construction, installation (EPCI), and hook-up and commissioning (HUC) services.

Under the full project scope, the consortium will provide EPCI and HUC services for the central production platform, living quarters platform, flare tower and bridges for the Block B gas development project off the southwest coast of Vietnam.

Block B gas will be piped through a US$1.3 billion pipeline covering a distance of 433 kilometers and will then mainly be used to feed the planned US$3.7 billion O Mon power complex. O Mon is a 3.8-gigawatt facility that consists of four units, of which only the 660-megawatt O Mon I facility is currently in service. Three other units of 1,050 MW are still in the planning stage.

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TOP PHOTO: AAL Dampier transports South Korean-engineered plant components from Pyeongtaek to Map Ta Phut. CREDIT: AAL