Malaysia’s deepwater explorations are expected to accelerate as more investments are directed towards underexplored areas.
That’s what analysts at BMI, a Fitch Solutions company, said in a report sent to Rigzone recently, adding that the country has already found success in deepwater development, “and with the government awarding additional deepwater blocks for exploration, efforts are set to further intensify in 2024 and beyond”.
“Since 1994, Malaysia has been offering exploration blocks in deepwater areas, but it wasn’t until 2021 that momentum in deepwater exploration really began to gain pace,” the analysts said in the report.
“This is due to Malaysia’s increased focus on tapping into previously unexplored reserves in deepwater regions as part of its long-term objective to meet oil and gas production targets,” they added.
“From 2021 to 2023, over ten deepwater blocks were offered through Malaysia’s petroleum bidding rounds (MBR), with seven blocks awarded to consortia of foreign and local companies,” they continued.
The analysts highlighted in the report that four deepwater blocks were offered in MBR 2021 and three deepwater blocks were offered in MBR 2022. MBR 2023 also included three deepwater blocks and MBR 2024 included two Discovered Resource Opportunities (DROs) in the deepwater Semporna and Sandakan basins off the eastern coast of Sabah, the analysts pointed out.
In the report, the analysts said international oil companies will continue to be crucial for Malaysia’s deepwater success.
“Since 2022, Petronas has signed several Production Sharing Contracts (PSCs) with Shell, TotalEnergies, and Inpex Corporation,” the analysts noted in the report.
“Shell plays a significant role in deepwater development, holding operating stakes in three deepwater blocks - SB2W, SB-X, and SK3B - which were awarded in MBR 2021 and MBR 2022,” they added.
“TotalEnergies owns a 34.9 percent interest in the ultra-deepwater block SB2K in Sabah and operates the block in partnership with Petronas and Shell. The MBR 2022 launch marked the return of Japanese explorer Inpex Corporation, participating in deepwater Block 4E with a water depth of 2,000 meters,” they continued.
“Previously, Inpex Corporation held interests in deepwater Blocks S and R in the state of Sabah before selling them to Santos. Inpex, which owns 52.5 percent of deepwater block SK4E in offshore Sarawak, is currently the block’s operator, alongside Petronas and Petroleum Sarawak Berhad (Petros),” they went on to state.
The analysts highlighted that Norway’s Longboat Energy is a new entrant in deepwater development, “now acting as the operator with a 36.75 percent stake in Block SK2A, awarded in MBR 2022”.
The BMI analysts noted in the report that Malaysia could experience a significant increase in exploration expenditures in 2024 as international oil companies prepare to fulfill drilling commitments under PSC terms. They also stated that recent deepwater oil and gas discoveries present significant potential benefits for oil and gas production.
“According to Malaysia Petroleum Management (MPM), since 1974, only 116 deepwater exploration wells have been drilled off Malaysia’s coast, constituting less than 10 percent of the total wells drilled in the country,” the analysts highlighted in the report.
“There are considerable opportunities to intensify drilling activities as a result of licensing commitments made in recent PSCs,” they added.
According to the Energy Institute’s latest statistical review of world energy, which was published last year, Malaysia produced 567,000 barrels of oil per day in 2022. That figure marked a 1.7 percent year on year decrease and 0.6 percent of global oil production in 2022, the review showed. From 2012 to 2022, Malaysia’s oil production dropped by an average of 1.5 percent per year, according to the review.
In terms of gas production, the country saw an output of 82.4 billion cubic meters in 2022, the review showed. That figure represented a 5.7 percent year on year increase and 2.0 percent of global natural gas output in 2022, the review revealed. From 2012 to 2022, Malaysia’s natural gas production increased by an average of 1.8 percent year on year, according to the EI review.
To contact the author, email andreas.exarheas@rigzone.com
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