Petronas pushes boundaries to shape Malaysia's upstream future

Daily Express

a day ago

Published on: Sunday, August 10, 2025
Published on: Sun, Aug 10, 2025 Text Size: Kuala Lumpur: Malaysia is positioning itself as a premier upstream oil and gas investment destination, driven by the opening of new hydrocarbon frontiers, progressive fiscal policies, and a clear strategy to future-proof its energy sector. Petronas' Malaysia Petroleum Management (MPM) senior vice president Datuk Bacho Pilong said the country's upstream sector reached historic highs in 2024 and now stands on the cusp of its next major growth phase.
Advertisement 'For the first time in our history, we hit 2.0 million barrels of oil equivalent per day in 2024 from humble beginnings of 100,000 barrels in the 1970s. That was the first peak,' he said. 'The second peak was the highest upstream capital spend ever recorded in Malaysia, at RM50 billion. And the third was the highest number of block awards in a decade – 14 in total,' he told Bernama in an interview recently. Malaysia is home to eight prolific hydrocarbon basins. While three are already producing, five more frontier basins remain largely untapped, presenting a major opportunity for investors seeking high-reward assets. 'Imagine the last 50 years our playground has only three basins. The next 50 years, the playground is going to be eight. That's the excitement,' Bacho said.
Advertisement Since the launch of the Malaysia Bid Round (MBR) in 2021, more than 25 exploration and development blocks have been awarded, marking a resurgence of upstream interest. This year, the momentum continues. MBR 2025 marks a new chapter, offering five exploration blocks and three Discovered Resource Opportunities (DRO) clusters. Among the early awards is the Mutiara Cluster Small Field Asset (SFA) Production Sharing Contract (PSC) to Dialog Resources Sdn Bhd, unlocking potential in Sabah's East Coast. Another key award is the Temaris Cluster SFA PSC, granted to Seascape Energy Asia (One) Sdn Bhd, which targets production of around 100 million standard cubic feet of gas per day by 2029. Additionally, Technical Evaluation Agreements (TEAs) have been signed with seven major companies for the Langkasuka basin including BP, Eni, TotalEnergies, Pertamina, PTTEP, AFED TEXCAL and Petronas Carigali. Meanwhile for the Layang-Layang basin, the companies involved include ConocoPhillips, INPEX, Pertamina, POSCO International, TotalEnergies and Petronas Carigali. MPM has now set its sights on achieving 'no white spot' on the map with full licensing already achieved for all blocks in Sarawak. The focus now shifts to Sabah and Peninsular Malaysia, where licensing momentum is accelerating. Bacho emphasised that what sets Malaysia apart is not only its subsurface potential but also a transparent and integrated regulatory structure. 'All these investors deal with a single party, Petronas,' he said, noting that regulatory clarity is complemented by progressive fiscal terms, such as the Enhanced Profitability Terms (EPT), designed to improve commercial viability. MPM has also introduced Malaysia Bid Round Plus (MBR+), a new licensing strategy targeting Discovered Resource Opportunities (DROs) and Late Life Assets (LLAs). This exclusive avenue for myPROdata subscribers has already seen 100 per cent take-up rates across two rounds. To enhance value further, a 'clustering strategy' is now in place, bundling exploration sub-blocks with DROs and vice-versa, enabling investors to tap into both early and late-stage assets in a single offering. 'This creates more value for investors. Some want longer-term risk, some want short-term production. With clustering, the investors can have both,' explained Bacho. He said MPM is also collaborating with the Ministry of Finance to roll out a carbon tax for the iron and steel sector in 2026, part of a broader move to engineer carbon management into energy development from the start. 'In projects moving forward, GHG (Greenhouse Gas) must be addressed upfront. It's part of the engineering, it is built in. Malaysia's Kasawari project, for example, has already integrated carbon capture and storage (CCS) into its design. 'This just shows how we're making sure sustainability isn't an afterthought, but something we build into every step as we develop new projects,' Bacho said. To reduce capital expenditure for investors, MPM introduced a Refurbished Platforms Menu, allowing the reuse of existing offshore structures for new field developments. Several companies are currently exploring this option. 'We offer investors existing platforms that are already refurbished and can be reused. That helps to reduce their capex,' Bacho said. Malaysia's Petronas myPROdata system, backed by RM500 million in annual seismic data investments, gives subscribers near-zero-cost access to critical subsurface data, an open-data approach Bacho calls a game changer. 'Not to make money out of you. No. It's to allow you to have access to our data. We invest so you don't have to. That's part of our unique proposition,' he said. Sabah is emerging as a key focus for Malaysia's upstream growth, home to four of the country's five remaining frontier basins. While Sarawak licensing is complete, the spotlight now turns to Sabah. * Follow us on our official WhatsApp channel and Telegram for breaking news alerts and key updates! * Do you have access to the Daily Express e-paper and online exclusive news? Check out subscription plans available.
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