There are no nuclear power plants in Southeast Asia, and very little of the region's energy is generated from renewables. Instead, like most regions Southeast Asia relies largely on coal, oil, and gas for its energy.
Outside of Indonesia, which is the world's third-largest generator of geothermal power, Southeast Asia has a long way to go when it comes to renewable energy development. It is on the agenda, however, as the region becomes a single community in 2015. The Association of Southeast Asian Nations, or ASEAN, has created a plan for regional energy security that includes pursuing new and renewable energy sources. There is even talk of eliminating gas subsidies to maintain competitiveness and encourage responsible consumption in the long term, though the actualization of that idea is far from guaranteed.
Coal is big in Indonesia and virtually nowhere else, though Vietnam and Thailand do have some production. And by big, I mean really big: Indonesia is the world's top thermal coal exporter. The country produced 370 million short tons in 2010, and estimates put that number as high as 390 Mmst for 2012. Its reserves are pegged at 21 billion short tons. That being said, domestic demand is growing quickly, and the government recently considered a tax on coal shipments to keep more of the commodity at home, or generating extra revenue for the state.
Indonesia was a member of OPEC until 2009. The country's production has declined steadily since 1998, and it became a net oil importer in 2004. Vietnam, Malaysia, and Indonesia all have significant reserves, but it likely will not be enough to handle increasing domestic demand. Analysts expect oil imports among ASEAN members to rise to nearly 4 million barrels per day by 2035, up from just over 1 million bpd in 2010.
Here are the top five oil producers in Southeast Asia:
2011 Oil Production
Indonesia is still the region's production leader, but its reserves are dwindling. Vietnam, on the other hand, went from 0.6 billion barrels of reserves in 2011 to 4.4 billion barrels in 2012, because of increased offshore exploration activity.
Indonesia is again the powerhouse here. As of 2010, the country was the world's second-largest natural gas exporter after Qatar. Unfortunately, as domestic demand increases, Indonesia is forced to keep more and more of its gas at home. The government is considering a moratorium on new gas contracts for this very reason.
Malaysia is also a big player in the LNG market. The country's state-owned Petronas has a monopoly on exploration and production, and is a leader in LNG export. Unlike many NOCs, Petronas is agreeable to signing production-sharing contracts with foreign companies, and that is ultimately how most of Malaysia's natural gas is produced.
Here are the top five natural gas producers in the region:
2010 Natural Gas Production (Bcf)
2011 Reserves (Tcf)
These numbers may increase as exploration increases. The Oil & Gas Journal estimated that as of January 2012, Vietnam's reserves were closer to 24.7 trillion cubic feet. Eni (NYSE: E) recently upped its stake in Vietnam's natural gas game, taking a 50% stake in an offshore block there. The company had already acquired a 50% stake in another offshore block earlier this year. Exploration offshore Myanmar will also increase now that sanctions against that country have been lifted by Europe and the U.S.
Southeast Asia is undergoing considerable change at the moment, and it has a direct impact on investment in the region. Perhaps the most significant development is the reform taking place in Myanmar, or Burma (there is still no consensus there). Under a new reformist president, the country has issued a wave of reforms that prompted both the U.S. and Europe to begin lifting sanctions on the country. The U.S. will send an ambassador to Myanmar for the first time in 22 years, and Congress is pressing President Barack Obama to allow investment in the country's oil and gas sector.
Most of the oil and gas assets in Southeast Asia are offshore. This can create problems like the one we see with China and Vietnam right now. China is laying claim to offshore blocks Vietnam swears belong to it. Where are these commodities buried, exactly? Whose ocean is that, exactly? Is that your oil or my oil? And if it spills? The region's population is growing rapidly, demand for energy will only increase, as will contentious relations with neighbors if policies and guidelines aren't put in place first.
Additionally, a handful of the governments in Southeast Asia are still authoritarian regimes. While the goal of increasing foreign oil and gas investment may foster relationships initially, there are no sure bets here.
Chevron (NYSE: CVX)
Chevron is the largest oil producer in Indonesia, accounting for 40% of the country's oil production. In 2011, the company produced 442,000 barrels of oil per day, and 636 Mmcf of natural gas per day. It has established geothermal operations in the Philippines, as well as Indonesia, with capacity to produce 1,273 MW.
CNOOC (NYSE: CEO)
CNOOC is causing an uproar in Vietnam right now because of its claims to offshore blocks in the western part of the South China Sea. The company invited foreign oil producers to vie for joint ventures in nine offshore blocks. Protesters hit the streets in Hanoi last weekend, because the blocks supposedly fall within Vietnam's 200 nautical mile economic zone.
Hess (NYSE: HES)
Hess has operations in Indonesia, Malaysia, and Thailand, and the region makes up 25% to 30% of its reserve base. The company's primary target is offshore gas, and in 2011, its Southeast Asian assets produced 407 mcf per day.
ConocoPhillips (NYSE: COP)
Conoco has a presence in Indonesia and Malaysia. The company has four Malaysian offshore fields scheduled to start producing between the end of this year and 2014. Most of the company's operations in Malaysia are joint ventures with Petronas and a handful of other E&Ps. Conoco holds at least a 25% stake in all its Malaysian projects.
Operations are further along in Indonesia, where Conoco produced 450 million cubic feet per day in 2011.
This National Oil Company is Malaysia's biggest source of revenue; estimates put the company's contributions at around 45% of the government's budget. Lately though, Petronas is acting more and more like an independent, and resenting its status as its government's cash box.
The company is moving forward with a deal to acquire Canada's Progress Energy Resources for $4.7 billion. Its CEO has come out against the government's policy of subsidizing gas, a practice that costs Petronas between $5.75 and $6.35 billion a year, and the company is currently working to implement changes that would allow it to focus on improving its oil business instead of padding government coffers.
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