Asia Experiences a Hectic 2014 in Upstream Asset Swaps

NOCs Grab Larger Slice of Asia’s Upstream Acquisitions

Under pressure to maintain or reverse falling oil production at their maturing fields, Asian NOCs see upstream acquisitions as a quicker way to boost supplies, particularly from nearby blocks. Such an approach would facilitate convenient access to crude oil for these firms, compared to shipping them from their upstream assets located faraway such as in Algeria, where Pertamina has an equity stake in an oil block.

Pertamina made the largest petroleum asset acquisition in Asia this year, when it agreed in September to pay $2 billion for a 30 percent interest in the Malaysian upstream assets belonging to U.S. independent oil firm Murphy Oil Corp. This is expected to increase Pertamina’s oil production from its foreign upstream assets beyond last year’s 63,000 barrels per day.

"We expect an increase this year because we will complete the acquisition of the Murphy Oil block this month or in mid-December," Pertamina Upstream Business Development chief Danie Tampubolon said, as quoted in a Nov. 18 Reuters report.

Murphy’s upstream assets in Malaysia, where it commenced operations in 1999, accounted for more than 40 percent, or about 86,000 barrels of oil equivalent per day (MMboepd), of the firm’s total net production in 2013.

Murphy has majority interests in seven separate production sharing contracts (PSCs) in Malaysia: Block K, Block H, Block P, SK 309, SK 311 and SK 314A, and three gas holding agreements in PM 311. The firm has booked total proved reserves of 125 million barrels of oil and 406 billion cubic feet in Malaysia, data from the firm's website indicated.

Regional interest in the Malaysian assets was strong, with Pertamina reportedly fending off competition from rival NOCs including Vietnam Oil and Gas Group (PetroVietnam) and India’s Oil and Gas Corp. Ltd. (ONGC), with both firms believed to have tabled bids of $1.8 billion and $1.5 billion, respectively.

Major Asia Upstream Asset Deals in 2014
Major Asia Upstream Asset Deals in 2014


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