Malaysia’s upstream sector is poised for further growth in 2024 as the government continues to promote offshore blocks for exploration.
That’s what analysts at BMI, a Fitch Solutions company, said in a report sent to Rigzone recently, adding that the upstream oil and gas industry in Malaysia “remains vibrant and continues to attract investors or Petroleum Arrangement Contractors (PACs), as highlighted by their participation in Malaysia’s previous petroleum bidding rounds”.
The analysts stated in the report that, in 2023, Malaysia made “significant progress in the upstream oil and gas segment as Petronas and PACs recorded 21 exploration discoveries and two exploration-appraisal successes”.
“According to Petronas, all new discoveries could contribute over one billion barrels of oil equivalent of new resources for Malaysia in 2023,” the analysts added.
“Sixteen discoveries are located in the Balingian, West, and Central Luconia basins of Sarawak state, while three others are located in Sabah state,” they went on to state.
The analysts also noted in the report that the 2020 commercial settlement between Petronas and the Sarawak government over granting of a bigger share of oil and gas revenues produced in the state paved the way for an uptick in exploration activities in Sarawak state.
“According to data from the Malaysia Energy Commission, Sarawak holds more than 60 percent of Malaysia’s total natural gas reserves and 40 percent of total crude oil reserves,” the analysts highlighted.
“New discoveries certainly boosted Malaysia’s efforts to reverse declining oil and gas production and could support its liquified natural gas (LNG) production and exports,” they added.
Malaysia signed a total of nine production sharing contracts (PSCs) in the first quarter of 2024, BMI pointed out in the report.
Stranded High-CO2 Fields
BMI analysts outlined in the report that stranded high-CO2 gas fields are now being targeted for development to support Malaysia’s long-term natural gas production targets.
“Malaysia is home to a large number of high-CO2 gas fields, which remain undeveloped,” the analysts said.
“The BIGST Discovered Resource Opportunities (DRO) Cluster, awarded to JX Nippon and Petronas, consists of five undeveloped high-CO2 gas fields: Bujang, Inas, Guling, Sepat, and Tujoh,” they added.
The cluster is estimated to contain four trillion cubic feet of gas reserves, BMI highlighted.
“Petronas has reportedly improved fiscal terms to incentivize investments in such complex developments,” the analysts said in the report.
“The development of the BIGST DRO cluster could be accompanied by investments in carbon capture and storage (CCS) projects,” they added.
“Petronas and JX Nippon have already signed a Heads of Agreement to develop the fields and a CCS project, which is slated to become the second CCS project in Malaysia after the first at the Kasawari field development,” they continued.
The analysts also noted in the report that there are other “significant” high-CO2 gas fields, “such as the K5 gas field, which has a CO2 content of 70 percent”.
“The K5 gas field discovered in 1970 is estimated to contain 21 trillion cubic feet of gas. Petronas allocated $1 billion for development of the offshore Sarawak field despite TotalEnergies having exited from the project in 2014,” they added.
The BMI analysts stated in the report that new oil and gas discoveries are essential to support Malaysia’s long-term energy security. They highlighted that the country has oil and gas production targets of two million barrels of oil equivalent per day by 2025 and beyond.
Malaysia Oil, Gas Output
According to the Energy Institute’s latest statistical review of world energy, Malaysia produced 82.4 billion cubic meters of natural gas in 2022. This represented a 5.7 percent year on year increase and 2.0 percent of total natural gas production in 2022, the review showed. From 2012 to 2022, Malaysia’s natural gas production grew by an average of 1.8 percent annually.
Malaysia produced 502,000 barrels per day of crude oil and condensate in 2022, the review revealed. That figure marked a 1.7 percent year on year drop and 0.6 percent of global crude oil and condensate output in 2022, according to the review, which showed that, from 2012 to 2022, Malaysia’s crude oil and condensate production has dropped by an average of 1.7 percent annually.
The U.S. was the country that produced the most natural gas (978.6 billion cubic meters) and crude oil and condensate (11.88 million barrels per day) in 2022, the EI’s review revealed.
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