OIL & GAS MARKET OVERVIEW - MALAYSIAN O&G MARKET - Business Malaysia
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MALAYSIAN
O&G MARKET
OIL & GAS
MARKET OVERVIEW
August 2018
Laetitia Boura
Senior Trade Advisor Industries, Energy & CleanTech
Business France Malaysia
WWW.BUSINESSFRANCE.FR
CONTENT 1. GENERAL OVERVIEW 2. UPSTREAM 3. GLOBAL EXPLORATION TREND 4. MID & DOWNSTREAM 5. ECOSYSTEM 6. CONCLUSION
GENERAL OVERVIEW MALAYSIAN O&G MARKET
KEY FIGURES (2017)
▪ 2nd producer in ASEAN and 26th rank of world proved reserves of crude oil (681 000 bbl/d –).
▪ 16th rank of world natural gas reserves.
▪ 28 billions of BOE (Baril Oil Eq): 70% Gas / 30% Oil
▪ 3rd global LNG exporter (after Qatar)
DRIVERS OF GROWTH
▪ 14.5% of the GDP (2016)
▪ 14.7% to the Government’s revenue (2016)
Source: https://www.researchgate.net/publication/321360712
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 3
UPSTREAM MALAYSIAN O&G MARKET
OPERATIONS:
▪ More than 400 O&G fields in operation
▪ Exploration Opportunity in 2016: 9 focus blocks
▪ 101 Productions Sharing Contracts (PSCs) and 6 Risk Sharing Contracts
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 4
GLOBAL EXPLORATION TRENDS MALAYSIAN O&G MARKET
▪ Challenges
▪ Fall in oil price – budget cost – inflated cost environment
▪ Monetization difficulties for gas
▪ Higher volumes in giant fields, longer lead time
▪ Return to positive value creation and reduce discovery cost to 1.3$/boe
▪ Declining volumes
▪ Total discovered volumes decrease 38Bboe (2010-2012) to 12 Bboe (2017) but size of average discovery
constant (77Mboe)
▪ Industry response
▪ Slashing budgets, headcount, exiting conventional exploration
▪ Dramatic fall of investment from 90B$ in 2014 to 35B$ in 2017 (record level)
▪ More resilient, smarter portfolio, do more with less capital
▪ Shift from exploration to DRO
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 5
GLOBAL EXPLORATION TRENDS MALAYSIAN O&G MARKET
▪ Discovery size
• 2010-2012 – Mainly high risk exploration
• 2015-2017 – More low risk exploration
➢ FOCUS ON NEAR-FIELD AND ONSHORE
▪ Return to volumes
➢ RESULT OF HIGH GRADING AND PRIORITIZATION IN A RESTRICTED
BUDGET ENVIRONMENT
➢ DEEPWATER DISCOVERIES MAKE 50% OF DISCOVERIES
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 6
MID & DOWNSTREAM MALAYSIAN O&G MARKET CURRENT SITUATION: MALAYSIA A INTERNATIONAL TRADING HUB ▪ 6 refineries with the total refining capacity of around 900,000 bbl/d. ▪ Costs reduce resulted in the relocation of sizable players as McDermott and Subsea 7. PENGERANG INTEGRATED PETROLEUM COMPLEX (PIPC) ▪ Pengerang Independent Deepwater Petroleum Terminal (PIDPT) ▪ Pengerang Integrated Complex (PIC) ▪ Refinery and Petrochemical Integrated Development (RAPID) © 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 7
ECOSYSTEM MALAYSIAN O&G MARKET
▪ After the Trans Pacific Partnership Agreement, PETRONAS will retain its regulatory and licensing role.
▪ PETRONAS growth and stature has been matched by a maturing local industry with over 4,000 oil & gas
businesses including International Oil Companies.
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 8
ECOSYSTEM – PETRONAS & PETROS ? MALAYSIAN O&G MARKET
▪ PDA 1974 – Creation of PETRONAS: Sole ownership and control of all upstream oil and gas resources
▪ June 2018
- Federal Court refuses PETRONAS case (requesting affirmation of PDA1974 having a federal implication, including
Sarawak)
- Based on MA 1963 - Sarawak reclaiming their “constitutional authority to regulate the mining and production of
O&G as well as the distribution of Gas”.
- Referral to High court
▪ 1 July 2018
- Creation of PETROS – Sarawak’s own oil & gas company comes into force
Regulatory challenge at Sarawak ?
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018 9
Sarawak Unsanctioned
High H2S High CO2
Opportunities Right Ahead Unsanctioned
High H2S
Unit: MMscf/d Producing
11%
19%
Long Term Sarawak Gas Supply-Demand Unsanctioned
CO2 >40%
15% Producing
10% CO2 10%
6 000
SK 2P+2C Producing
Resource as at High H2S
LNG 19%
2 1.1.2018 13% Producing
Unsanctioned 7% High CO2
5 000
CO2 20-40%
Sanctioned
Unsanctioned Sanctioned
Sanctioned CO2 >10%
4 000
High H2S High CO2
Domestic demand expected to grow; State is giving
3 000 focus to grow the petrochemical industry robustly as early as
2019/2020
Undersupplied in meeting current demand; PETRONAS
2 000 working hard to mitigate the shortfall in order to meet MLNG
plant demand
Power, Petrochemical, Remains a challenge to develop future field; amid the
1 000
Industries, Reticulation low oil prices and competition among LNG suppliers, developing
1 the discovered gas fields at competitive cost and maintaining
supply reliability is critical
0
Technology is the key; to unlock value from the high
2033
2034
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2035
2036
2037
2038
2039
2040
contaminant discovered resources
Maintaining a consistent investment flow in
Producing SSGP supply
Sanctioned Future Project exploration; to ensure sustainable resources to support the
Non LNG Demand LNG Plant Requirement future demand
Source: TOTAL Malaysia
OpenSabah
Growing the Gas Demand and Unlocking Deepwater Potentials
Unit: MMscf/d
Shallow
Long Term Sabah Gas Supply-Demand Water
water depth 200 m
MLNG & FLNGs
3
1500
Development of new pipeline infrastructure opens
up a new demand opportunities; The Trans Sabah Gas
Pipeline (TSGP) is expected to open up new demand center at
1000
the Sabah east coast region by 2020/2021
Challenge to develop future field; especially to unlock
Non-Power Sector the discovered resources at deepwater, stranded and marginal
2
500 Liberalizing the domestic gas remains a challenge;
Power Sector (incl as the cost of developing the future field increases, much efforts
Sandakan Power) need to be undertaken to relook at the domestic gas price
1
Maintaining a consistent investment flow in
0
exploration; to ensure sustainable resources to support the
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
future demand
Producing GCBD
Opportunity Power Sector
Non-Power Sector LNGs (export)
Additional Sipitang TSGP (Non Power)
Source: TOTAL Malaysia
Open *Opportunity refers to discovered resourcesMALAYSIAN O&G MARKET
CONCLUSION
MARKET PERSPECTIVES:
▪ Development of oil infrastructures, recycling, and dismantling services
▪ Know-how and technology with strong added value for exploration
(geology, geophysics, imaging, etc.)
▪ Drilling in deep sea, collect and treatment of gas
▪ EOR and marginal fields, capture of the CO2, etc.
▪ Challenge remains to develop Future Projects; Developing high contaminant gas resources at competitive cost
through technology solutions remains critical decision in order to provide competitive gas supply
GENERAL RECOMMENDATIONS
▪ Capacity of innovation (high technology in drilling, engineering of reservoirs, submarine engineering, design and
maintenance, equipment and high-technology applications)
▪ Find local partners referenced with Petronas
▪ Remain attentive to the evolutions of the conditions of eligibility for Sarawak
▪ attractive tax system and global incentive allowance (GIFT, Global Incentive For Trading) managed by the
MIDA. Agency which support investment in O&G,
▪ Maintaining consistent investment flow in exploration; to ensure sustainable resources to support the future
demand
© 2018 – BUSINESS FRANCE OIL & GAS GENERAL OVERVIEW – AUGUST 2018BUSINESS FRANCE MALAYSIA
French Trade Commission / Kuala Lumpur Office
EMBASSY OF FRANCE IN MALAYSIA
INDUSTRIES, ENERGY & CLEANTECH
Laetitia Boura
Senior Trade Advisor
laetitia.boura@businessfrance.fr
Charles MVOGO
Trade Advisor
charles.mvogo@businessfrance.fr
Shahreza SHAHRIR
Trade Advisor
shahreza.shahrir@businessfrance.fr
© 2018 - BUSINESS FRANCE
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