Malaysia’s upstream oil and gas (O&G) industry remains robust and continues to allure investors and petroleum arrangement contractors (PACs), as highlighted by BMI, a research unit of Fitch Solutions.
BMI’s analysis indicates that the nation’s upstream sector is poised for further expansion in 2024, buoyed by the government’s initiatives to promote offshore blocks for exploration.
In 2023, Malaysia witnessed significant advancements in the upstream oil and gas segment, with Petroliam Nasional Bhd (Petronas) and PACs achieving 21 exploration discoveries and two exploration-appraisal successes.
These discoveries, as per Petronas, have the potential to contribute over 1 billion barrels of oil equivalent of new resources for Malaysia.
Sixteen discoveries were located in the Balingian, West, and Central Luconia basins of Sarawak, while three others were in Sabah.
“These new discoveries have bolstered Malaysia’s efforts to counteract declining O&G production and could bolster its liquefied natural gas (LNG) production and exports,” BMI said in a statement.
Petronas kickstarted 2024 on a positive note by securing seven production sharing contracts (PSCs). The Malaysia Petroleum Management (MPM) awarded these PSCs for six exploration blocks and one discovered resource opportunities (DRO) cluster offered under the Malaysia Bid Round 2023 (MBR 2023).
The new PSCs were granted to various entities, including Petronas, E&P Malaysia Venture Sdn Bhd (EPMV), Petroleum Sarawak Exploration & Production Sdn Bhd (PSEP), and others, with expected capital investments exceeding RM1.3 billion (US$277 million).
In total, Malaysia has signed nine PSCs in the first quarter of 2024. Additionally, Petronas has launched the Malaysia Bid Round 2024 (MBR 2024), offering five exploration blocks and five DRO clusters to potential investors. The winners of the bid round are anticipated to be announced in the third quarter of 2024.
BMI emphasised that new oil and gas discoveries are crucial to supporting Malaysia’s long-term energy security. However, it remains uncertain whether all new discoveries will be developed.
Nevertheless, incentives to develop stranded oil and gas resources remain high, driven by strong global oil and gas prices and projections for domestic natural gas demand growth.
“The successive launches of petroleum bidding rounds underscore the importance of natural gas in Malaysia’s energy supply mix,” BMI noted. These initiatives are aligned with Malaysia’s ambitious oil and gas production targets of two million barrels of oil equivalent per day by 2025 and beyond.
