Consultancy Westwood Global Energy forecasts a significant surge in offshore Engineering, Procurement, and Construction (EPC) spending in the Asia-Pacific (APAC) region, projecting an increase to US$7.7 billion in 2026 from US$2.7 billion in 2025. Over the five-year period from 2025 to 2029, the APAC region is expected to account for 27% of global offshore EPCI (Engineering, Procurement, Construction, and Installation) investment.

Project Sanctions and Investment Drivers

This growth is largely driven by new offshore contracts in Southeast Asia, which are projected to total US$37 billion over the next five years. Key drivers include deepwater gas projects in Indonesia and the emergence of carbon capture and storage (CCS) projects in Malaysia. To date, five Final Investment Decisions (FIDs) have been made in these two countries in 2025, with another three anticipated before year-end, a notable increase from just three project sanctions in 2024. However, approximately 30% of the expected FIDs for 2026 are considered highly susceptible to delays, primarily due to high supply chain costs and low oil prices. It is estimated that four floating production projects could be sanctioned in the region in 2026.

Key Upcoming Projects

Several major projects are expected to be formally awarded in the coming years. These include:

• Eni’s Geng North floating production storage and offloading (FPSO) unit, to be won by Saipem.
• The Inpex-operated Abadi floating liquefied natural gas (FLNG) facility in Indonesia.
• The concept design for PTTEP’s Lang Lebah project offshore Malaysia.
• The BIGST cluster development offshore Malaysia, a joint venture between equal partners Petronas Carigali and JX Nippon.

Rig Market Challenges

In contrast to the positive EPC outlook, rig contract awards have declined in 2025, accompanied by lower utilization rates. The regional rig supply consists of approximately 52 jack-ups, nine semi-submersibles, five drillships, and 17 tender-assist rigs (TARs). Award activity is significantly more muted compared to 2023, with year-to-date figures for 2025 showing 4,541 jack-up days and 90 drillship days awarded, versus 11,684 jack-up days and 608 drillship days in 2023. Average dayrates have been declining globally since 2023-2024; for example, average jack-up dayrates in Indonesia were US$116,000 in 2023 and have remained at that level year-to-date in 2025, with potential for further reduction.

Operational and Regulatory Hurdles

The region faces several operational challenges, particularly in Malaysia and Indonesia. These include onerous contract terms and delays in obtaining regulatory and operational approvals. Furthermore, delays in procuring long lead items like wellheads, coupled with rising costs, present additional challenges for offshore companies operating in the region.

Contrasting Market Activity

Despite these challenges, rig contracting activity has not ceased entirely. For instance, Malaysia-listed Lianson Fleet Group is planning to establish a joint venture with Vietnam's state-owned PV Drilling to acquire, own, lease, and operate drilling rigs. Additionally, regional drilling contractor Velesto Energy reported a significantly higher utilization rate of 81% in the third quarter of 2025, compared to 57% in the previous quarter. However, such high utilization rates can themselves create challenges, as exemplified by Santos pushing back its wildcat drilling campaign