China is expected shortly to launch a crude oil futures contract priced in yuan and convertible into gold in what analysts say could be a game-changer for the industry.
Asian energy companies look set to catch up to their peers with investments in U.S. unconventional oil production, the area which has dominated global energy merger and acquisition activity over the last 12 months.
Falling oil production in Asia is forecast to accelerate as major fields dry up, which will stiffen demand for foreign barrels and help absorb the global glut. But Asia will be increasingly vulnerable to sudden price spikes as its reliance on imports climbs.
Global LNG players are pessimistic in the face of a glutted global LNG market and oil prices that are steadfastly refusing to rise.
China’s crude oil imports will remain strong through 2016 and 2017, as Beijing continues to fill its Strategic Petroleum Reserve (SPR) and domestic production falls sharply, helping rebalance the global oil markets.
For years, the world’s biggest liquefied natural gas sellers boasted at industry gatherings about the endless potential for demand growth in Asia. Until recently, LNG’s relatively high price and the commodity’s inflexible trade have been its undoing.
China has an out-sized influence on world oil and remains the most important market to watch, and it’s sending some confusing signals. Since the start of the year turmoil has gripped the country’s equities and a weakening currency has fueled concerns about the strength of the nation’s economy.
US major ConocoPhillips is seeking buyers for its legacy Block B fields in the Natuna sea, along with its transportation infrastructure and onshore receiving plant. The potential pullback comes only four months after ConocoPhillips’ chief executive Ryan Lance visited indonesia’s president, Joko Widodo, and pledged to increase investment in the country.
Australia’s Woodside Petroleum is poised for a shopping trolley dash that could see it spend up to A$5 billion ($4.4 billion) on upstream oil and LNG projects as part of an ambitious expansion drive.
ASIDE from some outrageously bullish claims that South Australian shale oil could rival Saudi Arabian conventional oil production, there has been little notable activity in the Asia Pacific’s unconventional oil sector. But the region’s potential remains a wild card for global oil markets.
Chatham House warns that the price of oil is heading for a crash similar to that seen almost 30 years ago when world oil prices fell by over 50%.
Stimulus measures may yet help the country meet its high growth targets. In the meantime, the data remains distinctly bearish.