Energy Demand Fueling Southeast Asia’s Emerging Oil and Gas Industry

Oil and Gas Investing

Increasing energy demands in Southeast Asia are driving new oil and gas discoveries and attracting the investment needed to build the region’s oil and gas industry.

Energy demand in Southeast Asia is rising alongside economic growth.

According to the International Energy Agency (IEA), energy demand among the Association of Southeast Asian Nations (ASEAN) has grown by 80 percent since 2000. Looking ahead, the region’s energy demand is expected to grow another 60 percent between now and 2040.

“Southeast Asia is set to become a key driver of world energy trends over the next 20 years as its energy demand grows at twice the global average, reflecting the region’s economic rise but also increasing the challenges for its policymakers,” said the IEA. Many Southeast Asian nations are looking to oil and gas resources to meet increased energy demand. The IEA projects oil demand in the region to surpass 9 million barrels per day (b/d) by 2040 compared to 6.5 million b/d today. Domestic natural gas sources, as well as imported liquefied natural gas (LNG), are also expected to play a significant role in Southeast Asia’s energy mix.

Domestic production of oil and gas in Southeast Asia hasn’t kept pace with rising demand, placing much of the region “on a path to becoming a large net importer.” The IEA has projected that Southeast Asia will succumb to an annual energy trade deficit of more than US$300 billion by 2040. On top of the high cost, high dependence on oil imports can also create energy security concerns for these countries.

Energy demand driving oil and gas exploration

Rising demand in Southeast Asia is prompting oil and gas companies to look to the region’s own resources to meet that demand. Some are making new discoveries, including the gas discovery at Essar Exploration & Production and ENI’s 50/50 joint venture Block 114 operation in the Song Hong Basin offshore of Vietnam.

According to a recent GlobalData report, between 2019 and 2025 a total of 54 crude and natural gas projects are expected to commence operations in six countries in Southeast Asia: Indonesia, Malaysia, Vietnam, Cambodia, Thailand and Myanmar. Together these projects represent about 223 thousand b/d of global crude production and about 8.1 billion cubic feet per day of global gas production in 2025.

Major players in Southeast Asia’s oil and gas market include Malaysia’s state-owned Petronas, Chevron (NYSE:CVX), Thailand’s state-owned PTT Public Co, Royal Dutch Shell (NYSE:RDS.A,LSE:RDSB), Exxon Mobil (NYSE:XOM), Total (NYSE:TOT) and Japan’s Mitsui & Co. (OTC Pink:MITSY,TSE:8031). These major players and their competitors are expected to collectively contribute about 59.5 mb/d of crude oil in 2025.

For now, Indonesia and Malaysia represent the most developed oil and gas sectors in Southeast Asia, but countries such as Cambodia, Thailand and Vietnam represent the biggest opportunities for early-stage growth. Of these three, Cambodia’s oil and gas industry is at the earliest stage.

Energy demand and Cambodia’s oil and gas sector

Compared to its neighbors, Cambodia’s oil and gas industry is not as well developed. In fact, the nation imports the vast majority of its petroleum products from Singapore, Vietnam and Thailand. However, the fact that oil and gas reserves have been developed on three sides of Cambodia’s borders — in the Gulf of Thailand to the west, the Khorat Plateau of Thailand to the north, and in the Vietnamese Cuu Long basin of the South China Sea to the south — bodes well for the nation’s own resource potential.

Oil and gas industry players are beginning to cash in on that potential. Singapore-based Kris Energy (SGX:SK3) is making headway toward bringing the country’s first offshore oil platform online in 2020. The company is currently developing Block A of the Apsara oilfield over the Khmer Basin, an underexplored area in the Gulf of Thailand’s Cambodian waters. An oil exploration agreement for Block D is in the works.

In a series of firsts for the nation’s oil and gas industry, the country is expected to get its first oil refinery in 2022. The US$1.6 billion Sihanoukville oil refinery is planned to be built in Southwestern Cambodia by a Cambodia-Chinese investment group and is projected to have an annual refining capacity of 5 million tonnes per annum (100,000 b/d).

“There is a lot of interest and government support in oil and gas development in Southeast Asia as a whole,” Stephen Burega, CEO of Angkor Resources (TSXV:ANK,OTC Pink:ANKOF), told the Investing News Network. Angkor has played a part in developing Cambodia’s mineral resources for more than a decade, including gold, copper, silver, molybdenum and other minerals across five licensed properties. The company recently became the only resource company in the country to receive approval from the Royal Government of Cambodia for oil and gas claims. Angkor’s 7,300 square kilometer Block VIII oil and gas concession is located in the Kampong-Som Basin, a recently recognized and unexplored onshore sedimentary basin in Southeastern Cambodia that has similar characteristics to other oil-bearing foreland basins.

“We see the potential for petroleum accumulations in Cambodia indicated by onshore natural oil seepages, the presence of sedimentary rocks and geological structures that trap and hold oil and gas and the similarity of geology of areas adjacent to Cambodia where oil and gas has been found and is being produced,” said Burega.

Cambodia’s offshore and onshore oil and gas investment opportunities have also attracted the interest of Mubadala Petroleum, one of the United Arab Emirates’ largest oil and gas companies. “We will come over to carry out studies as soon as possible because there is an immediate need for investment in Cambodia’s oil and gas sector,” said Mubadala Petroleum CEO Mazin al-Lamki in a meeting with State Secretary Meng Saktheara. The Abu Dhabi-owned company has operations in 10 countries across the Middle East, North Africa and Southeast Asia. “The firm is involved in Cambodia’s investment opportunities, including exploration and production, as well as the establishment of oil refineries,” said Cheap Sour, the general director of the Department of Petroleum in Cambodia’s Ministry of Mines and Energy.


With economic growth comes rising demand for energy resources. For now, much of Southeast Asia must rely on imports for its oil and gas supplies. However, with new discoveries and increased investments in the region’s oil and gas sector, nations like Vietnam and Cambodia are moving closer to energy independence.

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