Oil, Gas & Petrochemical Opportunities in Malaysia

An Expert's View about Extraction of Natural Gas in Malaysia

Posted on: 22 Sep 2010

Malaysia has the 27th largest crude oil reserves and the 10th largest gas reserves in the world. The report provides an overview of the opportunities for UK market.

Sector briefing Oil, Gas & Petrochemical Opportunities in Malaysia Why Malaysia? th Malaysia has the 27 largest crude oil reserves th and the 10 largest gas reserves in the world. Total domestic reserves are estimated to be 20.18 billion barrels of oil equivalent: 72.75% gas and 27.25% oil (figures quoted are as of st 1 January 2009: PETRONAS Annual Report 2009). Upstream, there are over 104 fields in production and total expenditure in this segment amounted to RM22.31 billion (approx. £4.23 billion) for 2009. The downstream sector is also large with a total of over 50 refineries, petrochemical plants, gas processing plants etc. PETRONAS, the national oil company, has Production Sharing Contracts with several international ?Promising deepwater operators including Shell and ExxonMobil, and discoveries and aggressive there is a vibrant domestic supply industry for expansion by PETRONAS have goods and services. Against this backdrop, propelled Malaysia to become there are many opportunities for UK companies a major Oil & Gas player in to do business in the Malaysian oil & gas the world stage? sector. Find general information on the Malaysian market conditions on UKTI?s website. The Doing Business Guide for Malaysia gives an overview of Malaysia?s economy, business culture, potential opportunities and an introduction to other relevant issue. UK Trade & Investment Sector briefing: Oil, Gas & Petrochemical opportunities in Malaysia recovery. Longer term, significant Opportunities opportunities will also emerge in decommissioning. Upstream There has been substantial activity in Malaysia Downstream for over 30 years and the market for equipment and services can therefore be The Malaysian downstream sector underwent considered to be a mature one. It should also rapid development in the 1980s-1990s with be noted that PETRONAS continues to promote many large pipelines and petrochemical plants the growth of indigenous manufacturing being built by PETRONAS and its international capability. There are, however, considerable partners. There have been few major projects opportunities offered to foreign companies due since 2000, although a methanol plant in to the increasing development of both Labuan was completed in 2007. deepwater and marginal fields. UK companies offering skills and experience in advanced Currently, a number of downstream projects drilling technology, reservoir engineering, are in various stages of execution including the subsea engineering and a range of design and PETRONAS' SOGT (Sabah Oil & Gas Terminal) maintenance services, in addition to equipment project that has been on the cards for quite supply (particularly in high technology areas), awhile. The SOGT project includes a are particularly well placed. construction of a 500km gas pipeline that connects Teluk Kimanis in Sabah (where the Malaysia's Exploration & Production sector gas is landed from the deepwater fields in remains vibrant despite the increasingly Sabah) to Bintulu, Sarawak (where PETRONAS challenging and costlier environment operates three LNG production plants). It is characterised by maturing hydrocarbon also hoped that this SOGT project will spark a acreages and scarcity in the supply of new wave of petrochemical developments in materials, equipment and experienced human Malaysia. capital. There are 71 Production Sharing Contracts (PSCs) in operation in Malaysia with Liquefied Natural Gas (LNG) 25 in Peninsular Malaysia, 22 in Sarawak and 24 in Sabah. Sixteen new fields, 7 new oil Malaysia is the second largest exporter of LNG fields and 9 new gas fields came on-stream in in the world. Gas from offshore Sarawak, which 2009 increasing the total number of producing represents about 45% of Malaysia?s production, fields in Malaysia to 104, of which 68 are oil is transmitted to Bintulu where it is liquefied fields and 36 gas fields. A total of RM22.31 and exported to Japan, Korea and Taiwan. billion (approx. £4.23 billion) was spent in Bintulu has three LNG plants and is the world's Malaysia's upstream sector during 2008, about largest single location for LNG production with 3.6% higher than previous year's expenditure a recently enhanced capacity of 27 mpta. The of RM21.54 billion (approx. £4.08 billion). Of LNG is shipped by the Malaysia International this RM12.01 billion (approx. £2.27 billion) or Shipping Corporation (MISC), the world?s 53.8% was spent on development and largest operator of LNG tankers, which is production projects, RM2.54 billion (£480 62.4% owned by PETRONAS. million) or 11.4% was spent on exploration activities, and the balance on operations. In UK, PETRONAS owns Star Energy (developer and operator of gas storage facilities), interests Deepwater development, in particular, offers in Dragon LNG Terminal and Co-generation significant opportunities for UK companies. facility located at Milford Haven, Wales. Murphy and Shell have recently discovered four world-class oil fields in deepwater offshore PETRONAS Sabah, East Malaysia. They will be investing heavily in developing these reserves over the PETRONAS was incorporated in 1974 as next five years. PETRONAS has firm ambitions Malaysia's national oil company. Vested with to become the hub for deepwater excellence in 100% ownership of the nation's hydrocarbon South East Asia and is keen to see more resources, PETRONAS has become a fully service companies make Malaysia their base integrated, international petroleum corporation for the region. participating in all sectors of the industry. It has interests in more than 30 countries Other opportunities exist in asset rejuvenation, worldwide and employs close to 40,000 marginal field development and enhanced oil UK Trade & Investment Sector briefing: Oil, Gas & Petrochemical opportunities in Malaysia personnel. Profits before tax in the year ending You can be alerted to business opportunities on March 2009 soared to an all-time high of a regular basis by registering on the UKTI RM89.1 billion (approx. £16.89 billion) on the website. Find out more on UKTI?s business record revenue of RM264.2 billion (approx. opportunities service on the UKTI website £50.08 billion). It is the only Malaysian company ranked among the FORTUNE Global 500® largest corporation in the world. PETRONAS works to certain procurement principles to encourage local participation and the transfer of technology. To operate in the upstream industry, companies need a PETRONAS licence, which is only granted to companies with 51% Malay ownership. In practice, this means that foreign companies either need to form a local company with a majority Malay shareholding, enter JVs with existing local companies or appoint a local agent who already holds the relevant licence. Contractors/Supply Chain There are many international contractors with a presence in Malaysia. These include: Foster Wheeler, Aker Solutions, Ranhill Worley Engineering, Sime Engineering, Technip, MMC Oil & Gas Engineering, Toyo Engineering & Construction, JGC, Chiyoda, JP Kenny, Bechtel and many others. Details of international and local upstream engineering companies can be found on the Association of Malaysian Oil & Gas Engineering Consultants (MOGEC)'s website: www.mogec.org.my Details of the major local fabrication companies can be found on the Offshore Structure Fabricators Association of Malaysia (OSFAM)'s website: www.osfam.org A multitude of large, medium and small service companies exist, many of whom are happy to work with UK companies on a JV or agency basis. Several have joined the Malaysian Oil and Gas Services Council (MOGSC) and details on individual members can be found on MOGSC's website: www.mogsc.org.my If you have any questions on the opportunities above, contact the UKTI] contacts named in this report. Business opportunities aimed specifically at UK companies are added daily to UKTI?s website. These leads are sourced by our staff overseas in British Embassies, High Commissions and Consulates, across all sectors and in over 100 markets. UK Trade & Investment Sector briefing: Oil, Gas & Petrochemical opportunities in Malaysia Major events and activities UKTI contacts EIConnect: Oil & Gas @ UK James Chan Organiser: Energy Industries Council Senior Trade Manager (Oil & Gas) Tel: +603 2170 2212 British High Commission Fax: +603 2170 2285 185 Jalan Ampang Contact: James Chan, Senior Trade Manager 50450 Kuala Lumpur Email: James.Chan@fco.gov.uk Tel: ++ 60 3 2170 2212 Website: www.ukinmalaysia.fco.gov.uk Fax: ++ 60 3 2170 2285 Dates: Proposed November 2010 Email: James.Chan@fco.gov.uk Website: https://ukinmalaysia.fco.gov.uk New export events are added daily to the site Jennifer Wong and you can register to be alerted to them on a Assistant Trade Manager (Oil & Gas) daily, weekly or monthly basis British High Commission 185 Jalan Ampang UKTI?s Tradeshow Access Programme (TAP) 50450 Kuala Lumpur provides grant support for eligible Small & Tel: ++ 60 3 2170 2251 Medium Sized Enterprises (SME's) to attend Fax: ++ 60 3 2170 2285 trade shows overseas. Find out more about Email: JenniferML.Wong@fco.gov.uk UKTI support for attendance at overseas Website: https://ukinmalaysia.fco.gov.uk events UK Trade & Investment Sector briefing: Oil, Gas & Petrochemical opportunities in Malaysia Next steps - How UKTI can help ? Arranging appointments British companies wishing to develop their ? Organise seminars or other events for business in the Malaysian market are advised you to meet contacts and promote your to undertake as much market research and company in the Chinese market planning as possible in the UK. UKTI?s team in Malaysia, with its wide local knowledge and This work is available via our Overseas Market experience, can provide a range of services to Introduction Service (OMIS) a chargeable British-based companies wishing to grow their service which assists British-based companies business in global markets. wishing to enter or expand their business in overseas markets. This can include: ? Provision of market information To find out more about commissioning this ? Validated lists of agents/distributors work, or accessing other UKTI services and ? Key market players or potential specialist advice, please visit the UKTI website customers in the Chinese market to find contact details for your local UKTI ? Establishment of interest of such office. contacts in working with you Whereas every effort has been made to ensure that the information given in this document is accurate, neither UK Trade & Investment nor its parent Departments (the Department for Business, Innovation & Skills, and the Foreign & Commonwealth Office), accept liability for any errors, omissions or misleading statements, and no warranty is given or responsibility accepted as to the standing of any individual, firm, company or other organisation mentioned. Published 2010 by UK Trade & Investment. Crown Copyright © UK Trade & Investment Sector briefing: Oil, Gas & Petrochemical opportunities in Malaysia
Posted: 22 September 2010