Photo by: Bloomberg
PERTH (miningweekly.com) – Analysts Wood Mackenzie say that global oil and gas major ExxonMobil might have difficulty finding buyers for its Asia Pacific assets, as the company considers a divestment programme that could be worth as a much as $5-billion.
ExxonMobil has previously revealed its ambitions to divest up to $15-billion worth of its assets by 2021, with the company at the end of September signing an agreement to sell its Norway upstream operation for $4.5-billion.
The company in recent weeks has confirmed it will sell stakes in Peninsular Malaysia and the Bass Strait joint venture (JV) in Australia.
“ExxonMobil holds several mature assets in Australia, Thailand and Malaysia, with large abandonment liabilities looming. The Asia Pacific portfolio also includes large-scale, but low return, and early-life, but low margin, resources in Vietnam and Indonesia.
“Divesting these assets would result in a more focused, higher-margin portfolio, centred on Papua New Guinea (PNG) and the non-operated Gorgon liquefied natural gas (LNG) project,” said Wood Mackenzie research director Andrew Harwood.
Wood Mackenzie has tipped not only the Bass Straits JV to be on the chopping block, but also the Kipper project in Australia, the Sinphuhorm and Nam Phong projects in Thailand, the Cai Voi Xanh project in Vietnam, Cepu in Indonesia and two projects in Malaysia.
“The growth potential of PNG and long-term, high-margin cash flow from Gorgon LNG will form the backbone of ExxonMobil’s Asia Pacific portfolio for the next decade. Disposing some or all the assets we have highlighted would allow the major to refocus on more material growth opportunities in the region and elsewhere in the global portfolio.
“ExxonMobil's 2020-2030 production compound annual growth rate in Asia Pacific would improve from -3% to +3% if the portfolio is concentrated on Gorgon and PNG,” Harwood said.
However, he noted that the bigger challenge facing ExxonMobil is availability of buyers.
“The majors have more than $70-billion of assets up for sale, so there is clearly no shortage of supply for potential buyers. In addition, recent merger and acquisition activity in the Asia Pacific has been dominated by a handful of regional national oil companies such as PTTEP, and local players, the likes of Medco Energi and Santos. It remains to be seen if these players still have the financial capability to support further acquisition ambitions.”
“After several aborted efforts in recent years, perhaps private equity will now sense a value opportunity and make a meaningful dive into the upstream market in Asia?” Harwood said.