KUALA LUMPUR: Malaysia’s upstream oil and gas (O&G) industry remains vibrant and continues to attract investors or petroleum arrangement contractors (PACs), as evidenced by participation in previous petroleum bidding rounds, said BMI.
The Fitch solutions company reckoned that the nation’s upstream sector is poised for further growth in 2024 as the government continues to promote offshore blocks for exploration.
In 2023, Malaysia made significant progress in the upstream oil and gas segment as Petroliam Nasional Bhd (Petronas) and PACs recorded 21 exploration discoveries and two exploration-appraisal successes.
According to Petronas, all discoveries could contribute to over 1 billion barrels of oil
equivalent of new resources for Malaysia in 2023, with 16 discoveries located in the Balingian, West, and Central Luconia basins of Sarawak, while three others are located in Sabah, BMI said.
"New discoveries certainly boosted Malaysia’s efforts to reverse declining O&G production and could support its liquified natural gas (LNG) production and exports,” it said in its industry trend analysis today.
It also highlighted that Petronas has made a good start to 2024, securing seven production sharing contracts (PSCs).
The Malaysia Petroleum Management (MPM), which manages Malaysia’s oil and gas reserves, awarded seven 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 awarded to Petronas, E&P Malaysia Venture Sdn Bhd (EPMV), Petroleum Sarawak Exploration & Production Sdn Bhd (PSEP), SMJ Energy Sdn Bhd, INPEX Malaysia E&P, PT Pertamina Malaysia Eksplorasi Produksi, Jadestone Energy Inc, Sarawak Shell Bhd and E&P O&M Services Sdn Bhd.
Petronas estimated that the contracts are expected to generate more than RM1.3 billion (US$277 million) worth of capital investment in the exploration activities.
In total, BMI said Malaysia has signed nine PSCs in the first quarter of 2024.
It said Petronas has also 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 expected to be announced in the third quarter of 2024.
"The successive launches of petroleum bidding rounds, with a focus on natural gas exploration and production, suggest that natural gas would remain a vital component of Malaysia’s energy supply mix,” it noted.
BMI added that new oil and gas discoveries are essential to support Malaysia’s long-term energy security, but it remains uncertain whether all new discoveries will be developed.
"However, incentives to develop stranded oil and gas resources remain high, given the sustained strength in global oil and gas prices and upward projections for domestic natural gas demand growth as well as to support Malaysia’s oil and gas production targets of two million barrels of oil equivalent per day by 2025 and beyond. - Bernama
