PETRONAS PUSHES BOUNDARIES TO SHAPE UPSTREAM FUTURE

Barnama

4 days ago

Unlocking New Basins 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.
KUALA LUMPUR, Aug 7 (Bernama) -- 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 Ir. 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. '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.
This year, the momentum continued. MBR 2025 marks a new chapter, offering five exploration blocks and three Discovered Resource Opportunities (DRO) clusters.
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.
Additionally, Technical Evaluation Agreements (TEA) 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.
Among early awards include 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.
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.
A Supportive Ecosystem for Investors
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.
Bacho explained, 'This creates more value for investors. Some want longer-term risk, some want short-term production. With clustering, the investors can have both.'
Bacho 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 must be addressed upfront. It's part of the engineering, it is built in,' he said.
He added, '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.
Technical Resources and Cost Efficiency
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,' Bacho added. 'We invest so you don't have to. That's part of our unique proposition.'
Sabah Rising: Unlocking the Next Energy Frontier
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.
A major milestone was the 2025 award of Block Mutiara in the Sandakan Basin, marking the revival of dormant acreage.
Japanese firm INPEX returned to develop Blocks SB306A and SB306B — the same area its predecessor ventured into in the 1960s, underscoring renewed global confidence. In the 1960s, via Sabah Teiseki Oil Co under Teikoku Oil., explored Sabah and drilled five wells off Sebatik Island near Tawau.
Sabah blocks are now being offered through MPM's clustering strategy, pairing Discovered Resource Opportunities (DRO) with exploration areas, supported by advanced seismic data, flexible fiscal terms, and access to PETRONAS myPROdata.
'In the past, Sabah only had three producing PSCs. Now, there are 10 active PSCs, and investor interest is increasing,' Bacho said.
This renewed push reflects Malaysia's long-term vision to grow its upstream sector while delivering inclusive development across key energy-producing regions.
Strategic Vision: Long-Term Sustainability
Malaysia continues to deliver approximately 2 million barrels of oil equivalent per day (boe/d), totaling around 700 million boe annually.
To sustain this, Malaysia is targeting 500–600 million boe in annual replenishment through new discoveries, a goal that requires 20–25 exploration wells per year, with a success rate of 50 per cent.
Each successful well is expected to yield around 50 million boe, supporting both volume replacement and long-term energy security.
These strategic undertakings represent a pivotal phase in PETRONAS' bold transformation journey as an integrated energy company, one that goes beyond maintaining its traditional upstream excellence by 2035.
'We are reimagining Malaysia's role as a regional leader through innovative partnerships, cutting-edge technology, and asset excellence,' said Bacho.
He added that this transformation reflects PETRONAS' evolution into a progressive energy and solutions partner, where every business decision – from exploring frontier basins to portfolio enhancement – aligns with the broader vision of delivering sustainable, competitive energy for the coming decade and beyond.
'This phase is what we call PETRONAS 2.0 – building tomorrow's energy ecosystem today, ensuring Malaysia remains not just relevant but essential in the global energy transition,' he added.
Growing Institutional Capacity
Bacho highlighted that state entities such as Petroleum Sarawak Bhd (Petros) and SMJ Energy Sdn Bhd are important partners in Malaysia's energy value chain.
'MPM works closely with Sabah and Sarawak to align state ambitions with national strategies and investor interests,' he said, emphasising that their growing roles reflect a maturing ecosystem rather than regulatory uncertainty.
To support future offshore operations, Petronas is upskilling local talent through initiatives such as the Skilled Trade Champion programme and technical training in scaffolding and mechanical fitting.
Meanwhile, academic-industry ties are being strengthened through RM71 million in research grants awarded to 61 recipients across 25 universities under the PETRONAS-Academia Collaboration Dialogue programme, aimed at accelerating energy innovation.
-- BERNAMA
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