Asian producers have scheduled several new oilfields to come on stream in the second half of this year, but they could face difficult times as the oversupplied market is not expected to improve in the short term, analysts said on Friday."For any new fields coming on stream, regardless of quality, it's going to be an interesting challenge for the marketers, they would likely face ugly conditions," said Michael Balladon of consultant AT Kearney in Singapore. "It would be an extremely optimistic person who says that we can count on better conditions in the next 12 months for marketing of crude oil," he said.
In the second half of July, the Elang/Kakatua field, located at the Timor Sea Zone of Cooperation between Australia and Indonesia, is due to start production with output between 33,000 and 35,000 barrels-per-day (bpd).
This field is the first production from the Zone of Cooperation, after the Timor Gap Treaty signed between the two countries in 1989.
In addition, Petronas plans to start up its Masafield, offshore Kertih on Malaysia peninsula east coast, by January next year. Masa is expected to produce 22,000 bpd initially.
The output from these new fields, even combined, is minute compared to Asia's total oil production of around six million bpd.
But with the global market still seeing a massive oversupply, the fields are not coming up at an opportune time, analysts said. Furthermore, there is weak demand, which is unlikely to recover soon, because Asia remains mired in an economic recession, analysts said.
Kanika Singh, regional economist with IDEA said the outlook for Asian demand in the next year is very bleak, which would put a dampener on producers' efforts in marketing new crudes.
"Near term, looking at demand and looking at supply, Asian refiners can't find demand in the domestic markets, they're all dumping on the international markets," Singh said. "In the next 12 months, things can only get worse," she said.
But despite the dim forecast, analysts said producers which had schedulednew output have few choices but to carry on with their plans. They said that once companies have invested to develop a field, there is an enormous incentive to produce, so long as there is a positive recovery.
Balladon said that for most crude fields in Asia, production costs on a global basis are relatively low. Fields are mostly shallow and the crude quality light, with low sulphur.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
