Major Upstream Investment Opportunity in Malaysia: WoodMac

Malaysia offers some of the most material and attractive upstream investment opportunities in Southeast Asia, primarily due to the need for additional gas supply, Wood Mackenzie said in a research report published June 24. 

The multiple breakdowns in the Sabah-Sarawak gas pipeline and a delayed final investment decision (FID) on the large Kasawari gas project have resulted in short-term supply crunch to the Bintulu MLNG plant. WoodMac sees this supply shortage persisting though until at least 2025, when major new fields - Jerun, Timi, Rosmari, Marjoram and Kasawari - are likely to be brought onstream.

"This is a golden opportunity for upstream players to swiftly bring gas onstream and jump ahead of the queue: either in the form of increasing existing production, or by developing smaller discoveries to tie into existing infrastructure. But speed is the key," said upstream research director Angus Rodger at the AOGC conference in Kuala Lumpur.

The most prospective basins for new discoveries and undeveloped gas resources in Malaysia are in offshore Sarawak. In this region, WoodMac estimates there is already 17 trillion ft³ of discovered and undeveloped gas that is commercially viable. However, as many of the easiest fields have already been commercialised, those that remain will be more difficult and costly to develop, WoodMac said. For example, half of the 17 trillion ft³ requires investment in technology to process higher levels of carbon dioxide and/or other contaminants, it said.

All this means that for explorers there are additional benefits in drilling for new sources of cleaner gas. Any such discoveries stand a good chance of leap-frogging the queue of existing resources and getting fast-tracked for development, WoodMac added.

"We expect Petronas to ramp up its own exploration efforts, particularly in deepwater Sarawak, to prove up easier-to-develop resources. It will also invest in new technology to develop some of the more challenging accumulations," stated Rodger.

"The national oil company (NOC) has already proven itself as a global technology leader through its deployment of the PFLNG1 vessel and development of the RAPID project. We expect this investment in innovation to continue, which sets Petronas apart from many of its NOC peer group," said Rodger.