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

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.

Takeaway

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.


This INNSpired article was written according to INN editorial standards to educate investors.

INN does not provide investment advice and the information in this article should not be considered a recommendation to buy or sell any security. INN does not endorse or recommend the business, products, services or securities of any company profiled.

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Royalty Financing and Investing In Rapidly Emerging Commodities Outside of Gold and Silver

Investing in royalty financing and emerging commodities outside of gold and silver is increasingly attractive due to lower risk and the ability to provide commodity price leverage and exposure to in-demand commodities and their price movements.

In recent years, royalty and streaming companies have quickly emerged as a popular choice among a broad spectrum of investors. They provide the capital to finance many of the most highly prospective mining projects around the world to provide investors with a perfect storm of minimized risks and economic upside.

With unparalleled exploration, diversification, and project acquisition opportunities, this particular type of alternative financing could be set for significant expansion over the next decade.

What is royalty streaming?

Marin Katusa, chairman of Katusa Research, told Kitco News in an interview, “I would start at the royalty side of things … that’s the easiest place to start because these are teams that are de-risking themselves.”

Royalty agreements and streams have similar structures at face value but key differences set them apart.

  • Royalty agreements: Also known as net smelter returns, these agreements provide royalty holders with a percentage of a specific mine’s revenue generated from production, typically hovering around one to three percent. Another common type of royalty agreement includes net profits interests, where the royalty holder receives a percentage of the profits rather than the revenue.
  • Streams: These contractual agreements provide the right to purchase a certain percent of metal production directly from the mine, typically ranging from five to twenty percent. Streams often will have a predetermined purchasing price for the metal, which is usually either a fixed dollar amount or a fixed percentage of the spot price.

An important distinction between royalty and streaming companies is that these entities are not mine operators. Instead, they seek to find untapped value through financing and working with miners to curate agreements that provide their shareholders with steady exposure to various mineral and metal markets. These agreements enable recipient mining companies to further develop or expand projects, providing greater returns for vested interests and the companies with royalties and stream agreements on the projects.

For junior mining companies, having the financing and support from more established royalty and streaming players can be especially beneficial as it may significantly boost development and exploration efforts and improve balance sheets across highly prospective project portfolios.

Risks and rewards to royalty streaming

In the case of royalty streaming, outlining major pros and cons can paint a clearer picture as to what potential downfalls these agreements have and what makes them one of the most popular financial strategies in 2021.

One of the main downfalls of royalty streaming relates to the structure of the business. Royalties and streaming companies have traditionally had intense competition competing within the precious metals space and needed a large amount of capital to invest in mines, which are raised through stocks or debt. Either companies accumulated debt on their balance sheet or issue stocks, which can involve some unfavorable stock dilution. However, there are very few royalty groups focused on clean energy metals and the costs of deals has been much lower thus far.

Another risk involves actual spot prices and mine production. If spot prices fall, so can revenue generation for royalty companies and metal selling prices for streaming. Additionally, in the case of mine delays, both types of companies may be impacted by a delay of commodity flow. Luckily, there are no costs to holding a royalty so there are no operating costs associated with shutdowns and the G&A required for running royalty companies is very low. .

By avoiding many of the operational costs, royalty and streaming companies cut out significant risks commonly associated with mining investments. While mining companies’ operational costs may rise, royalty and stream holders simply reap the potential benefits of high margins during peak pricing periods for their metals, having acquired them at lower fixed prices according to their agreement.

Another key advantage royalty and streaming companies have is advantageous portfolio diversification and the ability to be selective with their agreements. With the right management and strategic acquisition team, companies can minimize concentrated jurisdictional or asset risk and make agreements with mines already at near-term production staging. Since costs per ounce are contractually defined, this also protects streamers from cost overruns across the life of a mine.

Electric Royalties (TSXV:ELEC) is a royalty company focused on building a premium portfolio that takes advantage of the demand for a wide range of commodities and critical metals like lithium, vanadium, manganese, tin, graphite, cobalt, nickel and copper. Its focus on vital battery and base metal elements leverages the growing demand and global drive toward electrification across virtually all sectors, including transportation, rechargeable batteries, large-scale energy storage, renewable energy generation and more.

The company has a robust commodity portfolio, which helps to diversify investment and mitigate risk for investors and shareholders while leveraging exploration upside, revenue-driven business modelling and more. It currently has a portfolio of 12 royalties with exceptional exploration potential and four additional royalties currently under acquisition.

Electrification: Growing market for royalty streaming companies

The mining royalty and streaming sector have grown steadily from US$2.1 billion in 2010 to more than US$15 billion in 2019. While gold and silver take up a large portion of the streaming market, up-and-coming metals like copper and cobalt continue to show exceptional growth potential as the world shifts to greener alternatives to energy, power and more. Market researchers expect bright futures for both commodities despite disruptions in production in 2020.

Year-to-date:

  • Lithium prices are up 313 percent
  • Copper prices are up 25 percent
  • Zinc prices are up 22 percent
  • Nickel prices are up 18 percent
  • Tin prices are up 82 percent
  • Cobalt prices are up 75 percent

These raw materials expose prospective investors and many royalty streaming companies to multiple sectors, including new economy drivers like electric vehicles, batteries, energy storage, personal electronics and renewable energy platforms including wind and solar. .

Nova Royalty (TSXV:NOVR) is a royalty company focused on copper and nickel discovery as the foundational building blocks in clean energy decarbonization. With a rich portfolio of base metal royalty assets operating out of mining-friendly and highly prospective mining jurisdictions, Nova could become a leading royalty company in the transition to the future of sustainable energy.

With the battery revolution and growing demand for copper and nickel, the company has also strategically positioned itself as a potential frontrunner in the transition to an electric-powered world. As a royalty company, it has a decreased risk across a global portfolio.

Royalty financing: Economic upside potential for investors

For investors, royalty and streaming companies continue to be increasingly attractive due to their lower risk and ability to provide commodity-price leverage and exposure in-demand commodities and their price movements. In addition, investors in streaming companies advantageously leverage the ability to contract metal prices and delivery and tailor metals exposure more than royalty companies can.

Innovative companies are leveraging the momentum behind the transition for decarbonization into green power and investing in these companies outside of precious metal markets like gold and silver. With unprecedented demand and growth in prices for these raw commodities, market researchers predict more money investment opportunities coming into the sector for royalty and streaming companies exposed to these commodities.

Takeaway

Royalty and streaming companies present unparalleled investment opportunities with benefits of low risk, stable metal and mineral market diversified exposure and support for highly prospective mining projects across the globe. With no exposure to issues such as operating cost pressures or capital cost overruns due to predetermined metal pricing and revenue generation agreements, it comes as no surprise that royalty financing has become a significant strategy utilized by new and experienced investors.

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ESG investing best fits socially conscious investors looking for ESG companies focused on environmentally friendly practices to benefit from carbon credits.

Investing in companies based solely on in-depth financial analysis isn’t the only way to evaluate a company these days. Environmental, social and governance (ESG) investing is a trending investment strategy in which an investor assesses a company’s social presence as it relates to profitability and future returns before making an investment decision.

In 2020, the total worldwide. According to Bloomberg, global ESG assets are on track to exceed $53 trillion by 2025 –– showing no sign of slowing down any time soon. Some of the top ESG stocks, according to RBC Capital Markets, include large companies like Salesforce (NYSE:CRM), Microsoft (NASDAQ:MSFT), NVIDIA (NASDAQ:NVDA) and Gilead Sciences (NASDAQ:GILD) — to name a few.

It is clear that ESG investing has a role to play for the more socially-conscious investors out there. Read on to learn more about the basics of ESG investing and why this trend continues to grow in popularity.

What is ESG investing?

ESG stands for environmental, social and governance. ESG includes a variety of actions and responsibilities that a company takes towards building a more sustainable future. ESG initiatives typically come in the form of company policies, dedication to best practices or responsible operations.

Environmental impact includes all investments that support preservation and conservation of the natural world including climate change, carbon emissions, air and water pollution, biodiversity protection, deforestation, energy efficiency, waste management and water supply.

Social impact includes all investments that support the people and communities affected by a company’s operations including customer satisfaction, data protection and privacy, gender and diversity, employee engagement, community relations, human rights and labor standards.

Lastly, governance issues include investments in standards in which the company operates by, including board composition, board diversity, board independence, audit committee structure, risk and governance committee structure, compensation committee structure, health & safety committee structure, anti-bribery and anti-corruption bodies, lobbying, political contributions and whistleblower schemes.

ESG funds and stocks reduce portfolio risk and increase returns

Portfolios that include ESG investments have proven to have greater long-term success than those that do not. Part of this is because ESG funds have had progressively higher returns on investment due to resilience in the face of conventional market disruptions. For example, companies with strong ESG track records had less stock price volatility than non-ESG companies during the COVID-19 pandemic.

Research has also found that ESG stocks produce similar if not better financial results than non-ESG stocks. According to Arabesque, the top quintile S&P 500 companies with ESG initiatives performed more than 25 percent better than the bottom quintile companies from 2014 to 2018.

This reduction in portfolio risk is believed to partly stem from the fact that ESG companies are less likely to be involved in controversies –– whether it be environmental, social or governance due to proactive management.

Environmental is the leading ESG factor

According to recent survey data, among all ESG factors, pollution and waste management ranked top in importance and support from ESG investors. Investor prioritization of pollution and waste management is likely linked to growing concerns around climate change. Both large and smaller companies have responded to this growing concern by either launching or shifting to green models.

Steelcase (NYSE:SCS) is a company that produces furniture and architectural elements. Steelcase minimizes waste through smart product designs that easily allow for product disassembly for use in refurbishing and recycling. Steelcase produces very little waste in addition to reducing pollution through the use of renewable energy and water efficiency.

Hewlett Packard (NYSE:HPE) has also established a recycling program that spans 73 countries and has collected and recycled 90 million kilograms of plastic. The initiative has substantially cut back on landfill waste and reduced heavy metal pollution. Hewlett Packard has also reduced its greenhouse gas emission and water consumption through the use of 100 percent renewable energy in its manufacturing process.

Northstar Clean Technologies (TSXV:ROOF,TSXV:ROOF.WT) is an emerging clean technology company focused on the recovery and repurposing of single-use asphalt shingles. The company has developed a proprietary design process at its Empower Facility in Delta, BC for taking discarded asphalt shingles, otherwise destined for already over-crowded landfills, and extracting the liquid asphalt, aggregate sands and fiber. Northstar’s mission is to become the leading shingle material recovery provider in North America, extracting 99% of the recovered components from single-use asphalt shingles that would otherwise be sent to a landfill.

Carbon credits for ESG investments

The Canadian government recently announced an upcoming Canadian Federal Greenhouse Gas Offset System that will provide carbon credits to a variety of industries. Companies with ESG investments will be well primed for successful carbon credit trading given the expected rising costs of carbon under the Trudeau government.

For companies with ESG-focused models, a federalized carbon credit system will not only provide additional working capital but can improve profitability, growth and ROI potential.

Takeaway

ESG is considered to be crucial to business success. Industries that have not adopted ESG initiatives have received criticism and pressure from various stakeholders. As ESG takes off with billions of dollars in investment, investors may find ESG companies to be of more interest, specifically ESG companies with a focus on environmentally-friendly practices that are well-suited to benefit from carbon credits.

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The industrial applications of silver make it an ideal material for driving the green revolution.

Silver is one of the oldest precious metals known to humanity, rivaled only by gold. And like gold, silver demand comes from a variety of different markets that go far beyond traditional jewelry and currencies. This precious metal is heavily used in high-technology, electrical, thermal and many industrial spaces. With such usage versatility, especially in our increasingly electrified world, investors can expect silver demand to grow exponentially.

There are many technology use cases for silver today. Analysts project silver will play a pivotal role in the “green revolution,” playing a fundamental role in green technologies, as well as in the fintech space with its applications in crypto mining and the broader cryptocurrency market.

Before we dive into why silver is a worthwhile investment, it’s important to understand how silver is used in technology today, from its industrial applications to more modern technology products.

Silver’s unique properties in technology

Silver has the highest thermal and electrical conductivity of all metals which makes it highly used in electronics and technological applications today.

Electronics demand silver of the highest purity at 99.99 percent silver. During processing, the precious metal can either be smelted and refined from ore into bars or grains or dissolved in nitric acid to produce silver nitrate, which can be formed into powder or flakes. This material can then be fabricated into contacts or silver pastes, like conductive paste made with a silver-palladium alloy.

How is silver used in today’s technology products?

The number one use of silver in the technology industry is in electronics, making up 35 percent of total silver usage in the United States. The precious metal’s unsurpassed thermal and electrical conductivity among metals means it is a superior metal to less expensive alternatives.

Silver’s role as a superconductor makes its uses varied tremendously across the electronic and technology space. Small quantities of silver are used in electronic applications such as contacts in electrical switches and wires, nanosilver conductive inks in printed electronics, automotive innovation, silver oxide high-weight and high-capacity batteries and many everyday consumer devices.

Silver’s versatility also extends to the booming cryptocurrency industry. Unsurprisingly, the metal plays a vital role in the function of circuit boards inside computers and their accompanying keyboards. A computer’s cooling system needs silver’s superconductive thermal properties to keep the system from overheating while expanding the massive amount of energy computers need to compute. Crypto mining rigs run massive clusters of graphic processing units across a network of computers day and night so the necessity for silver conductivity cannot be understated.

Industrial Applications of Silver

According to market research, industrial buyers drive more than 50 percent of silver demand. In 2020 alone, industrial fabrication reached over 486.8 million ounces in demand. With rapid global efforts to decarbonize and electrify the world, three specific areas present highly prospective and high-level silver consumption.

These industries include the automotive sector and electric vehicles, including the associated infrastructure, the solar energy industry and the fifth-generation (5G) broadband cellular networks. By 2025, silver demand in 5G technology could more than double to 16 million ounces and, by 2030, triple to 23 million ounces, according to estimates by Precious Metals Commodity Management.

Additionally, the metal’s high tensile strength and ductility make it an ideal option for brazing and soldering or flattening into sheets for employment across different industries, including chemical production, medicine, photography and more. With so many applications, the highly valuable metal presents exceptional market demand and outlook as a commodity of the future.

Silver in today’s technology markets

At multiple levels of production, silver presents stellar economic growth and investor upside potential. Despite a global pandemic, silver proved its status as a safe-haven asset for investment portfolios, rising to 47.89 percent in 2020. However, before silver becomes a viable resource in the latest technology and industrial applications, markets need silver exploration and development companies to produce the valuable commodity.

Lakewood Exploration (CSE:LWD) is a silver exploration company focused on becoming a multi-mine silver producer. Its growing asset portfolio includes the recently acquired past-producing Silver Strand and Burnt Cabin mines located in the renowned Silver Valley mining district in Idaho, USA–a district that has produced over 1.2 billion ounces of silver and hosts some of the world’s largest silver mines; the Eliza project located adjacent to the historic Hamilton silver district, in Nevada, which produced 40M oz silver in the 1800s; the past-producing Silverton Silver mine also located in Nevada within the same trend as numerous multi-100M oz silver deposits;and the early-stage Lacy gold-silver project in British Columbia.

In August 2021, the company reported high-grade surface samples including 11.79g/t gold and 255g/t silver to further extend the mineralized trend at Silver Strand. “We are very excited with these results which confirm widespread alteration and gold-silver mineralization throughout the property and along the 5.5 km strike,” commented Lakewood Resources President Morgan Lekstrom.

Hecla Mining (NYSE:HL) is a mineral exploration and development company operating silver mines in Alaska, Idaho and Mexico. The company has a variety of exploration properties and pre-development projects in six silver- and gold-mining districts in North America. Hecla leverages North America’s politically stable and mining-friendly jurisdictions to meet the demands of current silver markets.

Santacruz Silver Mining (TSXV:SCZ,OTC Pink:SZSMF) is poised to become Mexico’s next mid-tier silver producer. It currently operates its Rosario project and Zimapan project in top mining districts in Mexico. Both properties benefit significantly from exceptional infrastructure, with road accessibility, utility networks, skilled labor, and significant exploration upside and discovery potential in one of the world’s richest silver-producing countries.

Takeaway

Today, silver presents exceptional versatility in usage across some of the world’s most dominant sectors. As a superconductor, the precious metal boasts the highest thermal and electrical conductivity of all metals, which makes it an ideal material for driving the “green revolution” and meeting the demands of increasingly electrified industries and popular crypto mining technologies. Investors could see tremendous economic upside gaining exposure to this safe-haven asset and the exploration companies that supply it to the world.

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