Singapore, May 04: Wood Mackenzie has highlighted the emergence of a critical second wave of deepwater gas developments across Southeast Asia, targeting an estimated 28 trillion cubic feet of resources in Indonesia, Malaysia, and Brunei.
According to the report, this “Deepwater 2.0” phase is expected to drive over USD 20 billion in new infrastructure and supply by 2030. However, the projects face fragile economics, with most delivering internal rates of return (IRR) of less than 15%, leaving little room for execution errors.
“Southeast Asia’s shallow-water and onshore gas fields are maturing rapidly, necessitating a shift toward deepwater resources,” said Dr. Munish Kumar, Senior Research Analyst at Wood Mackenzie. He noted that while the first wave of deepwater developments between 2008 and 2017 established commercial viability, the current phase faces tighter economic and operational constraints.
The new wave includes six major developments such as North Ganal, Rapak, and Ganal in Indonesia’s Kutei Basin, South Andaman projects in North Sumatra, Kelidang in Brunei, and Rosmari-Majoram in Malaysia. These projects are expected to play a key role in addressing declining production from mature fields and supporting domestic energy needs as well as LNG exports.
The operator landscape includes global majors like Eni and Shell, alongside national oil companies such as PETRONAS and emerging players like Mubadala.
Despite the strategic importance of these developments, Wood Mackenzie warns that even minor cost overruns, delays, or price fluctuations could significantly impact project viability. A 20% increase in capital expenditure or a similar drop in gas prices could erode project value by up to 150%, while delays of three years could reduce value by 50%.
To mitigate risks, operators are adopting accelerated execution strategies. For instance, Eni aims to bring certain projects to production within five years, while phased development approaches are being explored to optimize timelines and costs.
The report also underscores supply chain challenges, with global geopolitical tensions contributing to cost inflation and extended lead times for critical equipment.
As regional energy security concerns intensify, deepwater gas is increasingly being viewed as a strategic necessity rather than a high-risk frontier. The next five years will be crucial in determining whether Southeast Asia can successfully deliver these projects in a timely, cost-effective, and commercially viable manner.
