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Daily Express
21-07-2025
- Business
- Daily Express
Sabah emerging as Malaysia's next frontier of O&G investment
Published on: Monday, July 21, 2025 Published on: Mon, Jul 21, 2025 Text Size: Clearer regulatory frameworks amid rising geopolitical risks are shifting upstream oil and gas investment toward Malaysia with Sabah offering a stable operating environment per analysts. Photo source: PETALING JAYA: Driven by investor-friendly policies and untapped reserves, Sabah is outranking Sarawak as a more appealing destination for foreign direct investment (FDI) in Malaysia's upstream Oil and Gas (O&G) sector, according to industry observers. Sabah is drawing increased interest from international oil companies as geopolitical instability in the Middle East shifts focus toward Malaysia's stable investment climate, said economist Samirul Ariff Othman, an adjunct lecturer at Universiti Teknologi Petronas. Advertisement 'The 2025 Iran-Israel conflict and escalating Red Sea tensions have driven up freight insurance and security costs while disrupting supply chains across the Middle East and North America,' he said, hinting that investors are looking for lower-risk and high-potential alternatives, with Southeast Asia, particularly Malaysia, emerging as a preferred destination. The Sabah advantage Samirul noted that Sabah is better positioned to capitalise on the shifting global investment trends, especially in terms of near-term foreign direct investment (FDI) inflows. "Currently, Sabah is attracting the strongest near-term FDI inflows, followed by Sarawak,' he said, citing that ConocoPhillips' strategic shift from Sarawak to Sabah indicates the untapped potential of North Borneo's deepwater blocks. Samirul also pointed out that while the Langkasuka basin off Peninsular Malaysia's west coast is generating investor interest, monetisation through commercial development may be slow due to the lack of existing pipelines and processing facilities, as compared to the more developed infrastructure found in other basins, including that of Sabah. 'With ongoing studies in Blocks SB409 and SB310, and Kota Belud's redevelopment, Sabah is set to gain momentum in the second half of 2025,' he said. Regulatory roadblocks in Sarawak Commenting on the competitive landscape in East Malaysia, Samirul observed that while Sarawak has strong LNG infrastructure and active basins such as the SK318 and SK408 gas blocks, regulatory uncertainty involving national oil company PETRONAS and the state-owned PETROS continues to undermine investor confidence. "The overlapping authority between state and federal regulators has created a legal and fiscal limbo at the same time. Investors want clarity, not confusion. Until we resolve these jurisdictional ambiguities, billion-dollar projects will remain stuck at the drawing board," Samirul cautioned. 'While Sarawak's state oil company PETROS has bolstered its role in managing upstream resources, overlapping jurisdictions have added ambiguity in fiscal split and licensing processes.' In May, the federal and Sarawak governments announced a high-level agreement granting PETROS a bigger role as the state's gas aggregator. However, both entities are still engaged in negotiations over legal frameworks, operational control, and commercial terms, with unresolved complexities still hampering progress. Echoing this, Dr. Tricia Yeoh, associate professor at University of Nottingham Malaysia, remarked that Prime Minister Anwar Ibrahim's announcement of a broad agreement reached in February this year with Sarawak Premier Abang Johari Openg did little to resolve the prolonged regulatory ambiguity. "With PETRONAS and PETROS still locked in legal proceedings over an RM8 million bank guarantee in addition to the lack of regulatory clarity, investor confidence remains questionable," she said, hoping that both parties should jointly withdraw the suit and establish a clear, forward-looking partnership. The good news is that there is one positive takeaway from the announcement - all existing PETRONAS contracts with third parties will remain honoured. "However, this assurance still comes short of resolving the broader ambiguities surrounding the Petronas-Petros relationship as the statement does not address Sarawak's claim to resources over 200 nautical miles of its territorial waters, for instance,' Yeoh said, referring to Anwar's speech in the Dewan Rakyat on Feb 17 and a media statement issued by Abang Johari the following day. Yeoh stressed that the federal government should clearly outline the conditions for exceptions or carve-outs granted to individual states. 'If the unclear and confusing situation drags on, it is not helping our national O&G development,' she warned, calling for a joint committee compromising legal, financial and technical representatives from the federal and state governments - to work out a solution. 'With a clear direction in place, the nation can then move forward constructively,' she said. Production Sharing Contract (PSC) By the same token, Samirul favours the idea of creating a more competitive environment through a clearly defined regulatory framework governing the Production Sharing Contract (PSC). "Faster PSC approvals and better regulatory clarity in East Malaysia is needed to sustain FDI momentum through 2026 and beyond," he emphasised. Nevertheless, he acknowledges that Malaysia's PSC remains regionally competitive as compared to that of Indonesia and Vietnam where operators enjoy relatively low oil and gas royalties i.e. 5% to the federal government and 5% to state government - out of a 10% split - with up to 70% of cost recovery. PETRONAS to strengthen partnership Despite regulatory friction, PETRONAS continues to fortify its global ties with energy giants like ConocoPhillips, TotalEnergies, Eni, and Idemitsu, including upstream joint ventures in Indonesia. Commenting this, Samirul said: 'With global upstream costs rising due to inflation, supply chain bottlenecks, and deeper offshore exploration needs, joint ventures have become an essential risk mitigation strategy." "By pooling resources, companies can distribute exploration costs, mitigate capital risk, and combine cutting-edge technologies to make ambitious projects more viable," he pointed this out, wishing for policy and legal frameworks to catch up with investor expectations. * 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. Stay up-to-date by following Daily Express's Telegram channel. Daily Express Malaysia
New Straits Times
18-07-2025
- Business
- New Straits Times
Sabah emerges as Malaysia's strategic frontier for upstream O&G investment
KUALA LUMPUR: Amid intensifying global energy uncertainty, Sabah is fast emerging as a compelling destination for upstream oil and gas (O&G) investments. The state offers international players a stable, underexplored and increasingly investor-friendly environment, industry analysts said. The shift reflects broader regional realignments in upstream energy strategy, as geopolitical instability in traditional oil-producing regions pushes investors toward safer, high-potential frontiers especially in Southeast Asia, they added. Economist Samirul Ariff Othman, an adjunct lecturer at Universiti Teknologi Petronas, told FMT that Sabah had recently been attracting more international oil companies. This was spurred by instability in the Middle East and Malaysia's comparatively stable investment climate. "Presently, Sabah leads in near-term FDI flows, followed by Sarawak," he said. "The 2025 Iran-Israel skirmish and heightened Red Sea tensions have made freight insurance, security costs and supply stability in the Middle-East and North America increasingly uncertain. "Investors are looking for lower-risk (and) high-potential alternatives, and Southeast Asia fits that profile," the portal quoted him as saying. Sabah's Rising Profile in Deepwater Exploration According to Samirul, Sabah's underexplored deepwater blocks particularly Blocks SB409 and SB310 are drawing renewed attention, alongside the redevelopment of the Kota Belud field, which is expected to ramp up activity in the second half of 2025. Industry players have taken notice. ConocoPhillips' recent pivot away from Sarawak toward Sabah underscores growing confidence in the latter's upstream potential. While Sarawak continues to command significant attention due to its advanced LNG infrastructure and active gas blocks such as SK318 and SK408, analysts warn that lingering regulatory ambiguities are clouding investor sentiment. "The friction between Petronas and Sarawak's state oil company, Petros, has created uncertainty around fiscal terms and licensing processes," said Samirul. In May, federal and state authorities announced a framework granting Petros the role of gas aggregator in Sarawak. However, legal disputes and unclear operational boundaries between the two entities remain unresolved. Tricia Yeoh, associate professor at University of Nottingham Malaysia, told the portal that Prime Minister Datuk Seri Anwar Ibrahim's announcement of broad agreement reached in February this year with Sarawak Premier Tan Sri Abang Johari Openg had failed to clear the air sufficiently. "Neither statement addresses Sarawak's claim (to resources) over 200 nautical miles of territorial waters, so that remains at large," she said, referring to Anwar's speech in the Dewan Rakyat on Feb 17 and a media release issued by Abang Johari the following day. Regulatory clarity is still lacking, Yeoh said, adding that ongoing lawsuits, such as the RM8 million bank guarantee dispute, continue to cast a shadow. Malaysia's PSC Framework Still Competitive Samirul acknowledged that Malaysia's production-sharing contracts (PSCs) remain among the most attractive in the region, especially when compared to Indonesia and Vietnam. Under current terms, contractors pay five per cent royalty each to federal and state governments, after recovering 70 per cent of costs. However, he warned that delays in PSC approvals, combined with high royalty burdens for marginal fields, could dull Malaysia's competitiveness. "The fundamentals are strong but speed and predictability are everything in today's investment climate," he said. Yeoh echoed the sentiment, calling on Putrajaya to clarify the conditions under which states like Sabah and Sarawak may receive PSC carve-outs. "Dragging this issue for another year or 10 would severely damage Malaysia's upstream outlook," she cautioned. "As I have stated previously, there needs to be a joint Petronas-Petros committee (comprising lawyers, financial and technical representatives and members of the federal and state governments) that works out these details." Yeoh added that the joint committee should be given the space to deliberate in private until a consensus is reached after which the outcome should be made public. "The nation can then move forward constructively," she said. Stronger Petronas Future Despite local challenges, Petronas continues to bolster its global standing through strategic upstream partnerships with international oil majors such as Eni, TotalEnergies, Idemitsu and ConocoPhillips both within Malaysia and in regional plays like Indonesia. Joint ventures help Petronas hedge geopolitical and cost-related risks while gaining access to advanced technologies, particularly in deepwater exploration and carbon management, said Samirul. "With global upstream costs rising due to inflation, supply chain bottlenecks, and deeper offshore exploration needs, joint ventures are a rational de-risking strategy," he said. Samirul explained that shared equity spreads exploration costs, reduces capital exposure and allows partners to pool advanced technologies. These partnerships also allow Petronas to gain technical know-how from international oil majors experienced in carbon management and digital exploration and production, which supports its energy transition goals, he added.
Time of India
30-06-2025
- Politics
- Time of India
Bengal won't remain silent over torture of migrant workers: TMC
Kolkata: Bengali-speaking migrant workers were facing "persecution" in BJP-governed states and being branded Bangladeshis, Trinamool Congress Rajya Sabha member Samirul Islam said on Monday. "These migrant workers are being detained without any police records. Authorities are not even contacting the state govt to verify their citizenship. What, then, is the motive of Narendra Modi and Amit Shah?" Samirul, who is also chairman of West Bengal Migrant Worker Welfare Board, said on X. Trinamool posted the same from its official X handle. You Can Also Check: Kolkata AQI | Weather in Kolkata | Bank Holidays in Kolkata | Public Holidays in Kolkata "Do they intend to punish Bengal in this illegal way — bypassing all Indian laws — simply because they failed to win the state electorally?" Samirul wrote, adding: "If the govt led by @narendramodi and @AmitShah believes it can continue to torment Bengal in this manner, they are mistaken. Bengal will not remain silent. Under the leadership of @MamataOfficial, we will not allow the voices of the poor to be crushed simply because they speak Bengali. We will fight this battle — and we will fight it on our terms." Samirul said if infiltration had taken place, the responsibility lay with BSF. Reiterating what CM Mamata Banerjee had brought up many times, he said: "There are many migrant workers from other states living in Bengal. Have you ever heard of them facing such treatment?" Samirul also questioned the legality of the detentions. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Memperdagangkan CFD Emas dengan salah satu spread terendah? IC Markets Mendaftar Undo He said cops were detaining people for over 24 hours, without producing them in court. "Which law allows them to do so? Police are even refusing to accept Aadhaar Card, EPIC and ration card as identity proof," he said. The MP said Bengali was spoken by "polymaths and patriots like Rabindranath Tagore, Swami Vivekananda and Netaji Subhas Chandra Bose. Was BJP now humiliating stalwarts like these, he asked. BJP's Rajya Sabha MP Samik Bhattacharya said there were similar incidents of migrant workers being pushed back in Tamil Nadu. "We have been watching the same trend in non-BJP states and that is primarily due to the influx of illegal Bangladeshi immigrants. In many of these cases, Bangladeshi immigrants sneak into Bengal, get hold of fake documents from the Barasat-Basirhat area, and then spread into different parts of the country. This has triggered antagonism against migrant workers from Bengal. Moreover, Trinamool's narrative of outsiders has alienated people from Bengal," he claimed.
New Straits Times
15-06-2025
- Business
- New Straits Times
Global oil price surge to have dual impact on Malaysia
KUALA LUMPUR: The surge in global oil prices poses a mixed effect on Malaysia's economy, with the local energy-related stocks seeing immediate gains. The likes of Velesto Energy Bhd, Bumi Armada Bhd, Hibiscus Petroleum Bhd and Dialog Group Bhd saw their shares rising on Friday as oil prices jumped following rising geopolitical tensions in the Middle East. Industry observers, however, said stronger oil prices may drive up fuel and transportation costs, leading to broader inflationary pressures. Oil prices surged more than nine per cent on Friday to around US$75, their highest in almost five months, after Israel struck Iran. Brent crude futures jumped US$6.29, or 9.07 per cent, to US$75.65 a barrel by 0315 GMT after hitting an intraday high of US$78.50, the highest since Jan 27. US West Texas Intermediate crude was up US$6.43, or 9.45 per cent, at US$74.47 a barrel after hitting a high of US$77.62, the loftiest since Jan 21. Reuters reported that Friday's gains were the largest intraday moves for both contracts since 2022 after Russia invaded Ukraine, causing energy prices to spike. Pressure on inflation Economist Samirul Ariff Othman told Business Times that rising oil prices may drive up fuel and transportation costs. This will lead to broader inflationary pressures across consumer goods and business operations, particularly in sectors such as manufacturing and palm oil. At the same time, he said trade and logistics may come under strain due to potential shipping reroutes and rising freight charges. "Regional equities and currencies often react negatively to spikes. Asia saw stock drops immediately after today's strike. "However, Malaysia is also an oil and gas (O&G) exporter, so government revenue and energy sector profits will benefit, partially offsetting broader inflation pressures," he said. Samirul said if the conflict remains contained and no critical energy facilities are targeted, prices may retreat to US$70-US$75 per barrel, maintaining elevated risk premiums but not exceeding historical averages. However, if tensions escalate or the conflict persists, the situation could trigger a more sustained increase in prices. "Supply-chain barriers, through both oil and shipping lane disruptions, could keep prices elevated for months, potentially into the US$90 to US$120 range," he added. Samirul said the intraday surge in oil prices is deeply significant, as it constitutes one of the largest one-day moves in recent years. "Historically, such spikes have occurred only during major shocks, like the 2022 Ukraine war or 1970s oil-crisis era," he said. Worst case scenario Samirul also noted that global analysts at JP Morgan have warned that current oil prices already factor in a seven per cent probability of a worst-case supply disruption scenario, where prices could hit US$120 per barrel. "Yet if Iran retaliates, striking energy infrastructure or disrupting the Strait of Hormuz, the spike could accelerate and deepen. "If they don't, prices may ease back toward the low-US$70s, although elevated risk premiums could maintain somewhat higher levels than pre‑shock," he added. The economist explained that an escalation would likely affect global supply through two primary channels. The first is actual disruption, where Iran might launch direct attacks on oil tankers or production facilities in the region, with worst-case scenarios putting up to 20 million barrels per day (bpd) at risk. The second is a precautionary risk premium, where even in the absence of physical damage, heightened fears could lead to the closure of key shipping routes such as the Strait of Hormuz. "The World Bank models a 500,000 to two million bpd loss as 'small disruption' and six-eight million bpd in 'large disruption' scenarios. "That could drive prices sharply higher up by 20 to 75 per cent and force global supply chains to reroute, adding cost and time," he explained. Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the sharp increase in Brent crude prices was mainly driven by Israel's strike on Iran, noting that geopolitical factors typically cause short-term shocks to oil prices. "After a while it would fade and it will go back to the fundamental aspect of the industries where the demand for oil is expected to trend lower as global growth momentum is expected to moderate based on the recent downward revision by the International Monetary Fund and World Bank," he said. Afzanizam noted that members of the Organisation of the Petroleum Exporting Countries and its allies (Opec+) had agreed to increase oil supply during their meeting in May this year, pointing to stable global growth and solid market fundamentals as the basis for the decision. "On that note, there are no issues on supply of oil and therefore, the sharp spike in crude oil prices are likely to be unsustainable," he said. He added that the price surge is temporary and primarily driven by geopolitical tensions. "Fundamentally speaking, the global oil supplies are sufficient and the expected moderation in global growth would demand for oil would remain fairly stable. The price spike looks like a temporary knee-jerk reaction," Afzanizam said. Hot stocks On Friday, Bursa Malaysia's Energy Index, which boasts 31 stocks, opened at 735.96 and climbed 2.01 per cent, gaining 14.63 points to end the day at 740.76. Meanwhile, the benchmark FTSE Bursa Malaysia KLCI fell by 0.56 per cent, shedding 8.51 points to close at 1,518.11. UOB Kay Hian Wealth Advisors Sdn Bhd head of investment research Mohd Sedek Jantan said markets were in the process of repricing geopolitical risk, with Brent crude potentially surging past US$80 per barrel. "In the short term, this presents a tactical opportunity for oil and gas sector trades. "Unlike the relatively short-lived two-week spike observed during the early phase of the Russia-Ukraine war, the duration of the current oil price shock could prove to be longer-lasting," he said. Sedek added that stocks worth trading on short-term oil price momentum are the stocks that have upstream exposure or increasing mix of upstream concessions vs performing O&G services. Among the most actively traded stocks, Velesto climbed 2.78 per cent to finish at 18.5 sen, while Bumi Armada edged up 2.08 per cent to 49 sen. Dialog Group advanced 3.97 per cent to RM1.57, and Perdana Petroleum rose 5.56 per cent to 19 sen. On the top gainers list, Petron Malaysia Refining & Marketing Bhd increased 3.74 per cent to close at RM3.88, while Hibiscus Petroleum surged 7.10 per cent, closing at RM1.66. Meanwhile, Deleum Bhd gained 6.21 per cent to RM1.54, Yinson Holdings added 1.29 per cent to RM2.36, and Wasco Bhd was up 4.35 per cent to close at 96 sen.
New Straits Times
30-04-2025
- Business
- New Straits Times
Petronas-Petros clarity needed to stem investment outflow: Analysts
KUALA LUMPUR: Sarawak could be looking at a broader pattern of foreign direct investment outflow barring greater regulatory clarity, several analysts suggested. Speaking to FMT, senior consultant Samirul Ariff Othman said a mix of local and international challenges motivated the recent ConocoPhilips exit from the Salam-Patawali project. The US oil major's exit from Salam-Patawali comes months after another foreign oil and gas company, Thailand's PTTEP, shelved the Lang Lebah gas project until 2026. Industry observers point to the ongoing regulatory uncertainty caused by the unresolved Petronas-Petros settlement as causing this two-year delay, as reported by Scoop. While each project has unique challenges, the back-to-back cancellations suggest a potential emerging trend influenced by economic pressures and regulatory uncertainties," Samirul from Global Asia Consulting said. In 2025, an ongoing trade war between the United States and various countries has triggered other economic risks. These include fears of inflation and recession, as well as falling oil prices. "Fluctuating global energy prices and economic uncertainties can impact investment decisions in large-scale O&G projects. "The combination of rising costs, global market volatility, and unresolved local disputes may lead other investors to reassess their commitments in the region," Samirul said. Jamil Ghani, a former analyst with the Malaysia Petroleum Resources Corporation, told FMT that regulatory clarity is of utmost importance to stabilise Malaysia's business environment. "Regulatory uncertainty - especially the unresolved role of Petros as the state's designated gas aggregator - risks amplifying investor anxiety. Although Petronas has confirmed that discussions with Petros are ongoing, ambiguity around intermediary or middleman arrangements undermines confidence at a time when national cohesion is critical," Jamil said, referring to the federal government's insistence that Petronas' contracts remain untouched with no middleman involved. Amid a challenging global environment, he stressed that Malaysia cannot afford the perception of internal disunity - least of all in its strategic energy sector. "If Petronas is to remain a bulwark of national stability, policy cohesion and operational continuity must take precedence," Jamil added. "That means Sarawak and the federal government must urgently stabilise the current dispute for the economic resilience of an entire nation." Long-term regulatory clarity is crucial for attracting and retaining foreign partners in Malaysia's upstream sector. "Clear and stable fiscal terms, along with consistent enforcement of production sharing contracts, are essential to maintain investor confidence," Samirul said. Challenges ahead According to Upstream, the Salam-Patawali was not a large project but a pivotal one considering Malaysia's ambitions to raise oil and gas production. The standalone development, which involved a floating vessel capable of handling over 100 million cubic feet of gas, was well-supported by Petronas. According to Upstream Online, Petronas is keen to continue the project but cannot take it forward alone for the time being due to lack of capacity. Pritish Bhattacharya, a research officer at Singapore's ISEAS-Yusof Ishak Institute, told FMT Sarawak's push for oil and gas autonomy has put Petronas's monopoly at risk, with broader repercussions for the national economy and local industry. Pritish said the implications for the overall Malaysian economy are still "very hard to quantify". "(On the other hand), the potential loss of Petronas's resource access will create spillover challenges for international oil companies that are accustomed to centralised dealings," he said. This will be a concern especially in terms of foreign investments. These investors have essentially dealt only with Petronas in their dealings in Malaysia, and it could complicate matters if they now have to work with Petros. Jamil said the sector's domestic value chain is wide and vulnerable. According to the statistics department, there were 2,894 establishments engaged in oil and gas services and equipment activities as of the latest census.
