KUCHING: Malaysia has the potential to be the regional hub for deepwater, oil and gas (O&G) field services and offshore support vessel (OSV) shipbuilding as exploration and development activities increase.
MOVING FORWARD: Future growth in production is likely to come from EOR techniques and development of smaller fields.
According to International Investor, Malaysia has O&G reserves of 20.56 billion barrels of oil equivalent (boe) and considering current levels of production at 584 million boe every year, the theoretical reserves-to-production (R/P) ratio works out to 34 years.
Meanwhile, the undiscovered hydrocarbon resources, estimated to be around 10 billion boe, was in deep and ultra deep waters.
“Most of the shallow water fields have reached maturity and it will be quite an uphill task to maintain O&G production at current levels. It will also be a challenge to extract all the reserves with existing methods and technology,” said its country publisher Cory D’Abreo.
“As such, domestic O&G production is not expected to grow substantially beyond the current levels, as the size of the new O&G discoveries are smaller than in the past,” he added.
Future growth in production was likely to come from Enhanced Oil Recovery (EOR) techniques and development of smaller fields, which also played an important role in maintaining the country’s current level of hydrocarbon output from mature fields.
He further highlighted Malaysia, with its mature fields, presented significant opportunities for maintenance and replacement of assets. Development of new fields would drive the growth in the greenfield sector moving forward.
Till date, national oil company Petroliam Nasional Bhd (Petronas) had identified around 90 marginal fields that could be developed economically at prevailing O&G prices.
Sepat, Beranti, Cendor Phase 2, Balai and Bentara fields, Cenang and Tembikai, Desaru, Jambu and Serendah were the first batch of marginal fields marked for development. The Sepat pilot project was the first, followed by Berantai.
According to D’Abreo, the capital expenditure (capex) required to develop a marginal field was estimated to be US$0.7 billion to US$1 billion and the project was profitable when oil prices were over US$65 per barrel.
There are currently 77 active production sharing contracts (PSCs) between Petronas and the O&G players. Of these, 28 were in exploration, 15 in development and 34 in producing stages.
Out of 20 international O&G exploration companies present in Malaysia, 16 of them operate O&G upstream assets in the country.
“Entry barriers to the upstream O&G support service market are high. It requires high level of technical capability coupled with previous experience to get a licence,” said D’Abreo.
“That is why Malaysia has the potential to be a regional hub for oilfield services as well as deepwater project. With the advance technology and improving techniques, opportunities moving forward are wide open,” he concluded.