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OIL & GASMARKET OVERVIEW
August 2018
Laetitia Boura
Senior Trade Advisor Industries, Energy & CleanTech
Business France Malaysia
MALAYSIAN
O&G MARKET
CONTENT
1. GENERAL OVERVIEW
2. UPSTREAM
3. GLOBAL EXPLORATION TREND
4. MID & DOWNSTREAM
5. ECOSYSTEM
6. CONCLUSION
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETGENERAL OVERVIEW
3
KEY FIGURES (2017)
▪ 2nd producer in ASEAN and 26th rank of world proved reserves of crude oil (681 000 bbl/d –).
▪ 16th rank of world natural gas reserves.
▪ 28 billions of BOE (Baril Oil Eq): 70% Gas / 30% Oil
▪ 3rd global LNG exporter (after Qatar)
DRIVERS OF GROWTH
▪ 14.5% of the GDP (2016)
▪ 14.7% to the Government’s revenue (2016)
Source: https://www.researchgate.net/publication/321360712
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETUPSTREAM
4
OPERATIONS:
▪ More than 400 O&G fields in operation
▪ Exploration Opportunity in 2016: 9 focus blocks
▪ 101 Productions Sharing Contracts (PSCs) and 6 Risk Sharing Contracts
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETGLOBAL EXPLORATION TRENDS
5
▪ Challenges
▪ Fall in oil price – budget cost – inflated cost environment
▪ Monetization difficulties for gas
▪ Higher volumes in giant fields, longer lead time
▪ Return to positive value creation and reduce discovery cost to 1.3$/boe
▪ Declining volumes
▪ Total discovered volumes decrease 38Bboe (2010-2012) to 12 Bboe (2017) but size of average discovery constant (77Mboe)
▪ Industry response
▪ Slashing budgets, headcount, exiting conventional exploration
▪ Dramatic fall of investment from 90B$ in 2014 to 35B$ in 2017 (record level)
▪ More resilient, smarter portfolio, do more with less capital
▪ Shift from exploration to DRO
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETGLOBAL EXPLORATION TRENDS
6
▪ Discovery size
• 2010-2012 – Mainly high risk exploration
• 2015-2017 – More low risk exploration
➢ FOCUS ON NEAR-FIELD AND ONSHORE
▪ Return to volumes
➢ RESULT OF HIGH GRADING AND PRIORITIZATION IN A RESTRICTED
BUDGET ENVIRONMENT
➢ DEEPWATER DISCOVERIES MAKE 50% OF DISCOVERIES
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETMID & DOWNSTREAM
7
CURRENT SITUATION: MALAYSIA A INTERNATIONAL TRADING HUB
▪ 6 refineries with the total refining capacity of around 900,000 bbl/d.
▪ Costs reduce resulted in the relocation of sizable players as McDermott and Subsea 7.
PENGERANG INTEGRATED PETROLEUM COMPLEX (PIPC)
▪ Pengerang Independent Deepwater Petroleum Terminal (PIDPT)
▪ Pengerang Integrated Complex (PIC)
▪ Refinery and Petrochemical Integrated Development (RAPID)
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETECOSYSTEM
8
▪ After the Trans Pacific Partnership Agreement, PETRONAS will retain its regulatory and licensing role.
▪ PETRONAS growth and stature has been matched by a maturing local industry with over 4,000 oil & gas
businesses including International Oil Companies.
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETECOSYSTEM – PETRONAS & PETROS ?
9
▪ PDA 1974 – Creation of PETRONAS: Sole ownership and control of all upstream oil and gas resources
▪ June 2018
- Federal Court refuses PETRONAS case (requesting affirmation of PDA1974 having a federal implication, including
Sarawak)
- Based on MA 1963 - Sarawak reclaiming their “constitutional authority to regulate the mining and production of
O&G as well as the distribution of Gas”.
- Referral to High court
▪ 1 July 2018
- Creation of PETROS – Sarawak’s own oil & gas company comes into force
Regulatory challenge at Sarawak ?
Open
Sarawak
Domestic demand expected to grow; State is giving
focus to grow the petrochemical industry robustly as early as 2019/2020
Undersupplied in meeting current demand; PETRONAS
working hard to mitigate the shortfall in order to meet MLNG plant demand
Remains a challenge to develop future field; amid the
low oil prices and competition among LNG suppliers, developing the discovered gas fields at competitive cost and maintaining supply reliability is critical
Technology is the key; to unlock value from the high
contaminant discovered resources
Maintaining a consistent investment flow in exploration; to ensure sustainable resources to support the
future demand
Opportunities Right Ahead
SK 2P+2C Resource as at 1.1.2018
Long Term Sarawak Gas Supply-Demand
0
1 000
2 000
3 000
4 000
5 000
6 000
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
20
36
20
37
20
38
20
39
20
40
Producing SSGP supply
Sanctioned Future Project
Non LNG Demand LNG Plant Requirement
2
1
LNG
Power, Petrochemical, Industries, Reticulation
Unit: MMscf/d
11%
15%
19%
19%
7%
10%
13%
Producing
Producing CO2 10%
Sanctioned
Producing High H2S
Producing High CO2
SanctionedCO2 >10%
Unsanctioned High H2S
UnsanctionedCO2 >40%
Unsanctioned High H2S High CO2
UnsanctionedCO2 20-40%
UnsanctionedSanctioned
High H2S High CO2
Source: TOTAL Malaysia
Sabah
Development of new pipeline infrastructure opens up a new demand opportunities; The Trans Sabah Gas
Pipeline (TSGP) is expected to open up new demand center at the Sabah east coast region by 2020/2021
Challenge to develop future field; especially to unlock
the discovered resources at deepwater, stranded and marginal
Liberalizing the domestic gas remains a challenge; as the cost of developing the future field increases, much efforts need to be undertaken to relook at the domestic gas price
Maintaining a consistent investment flow in exploration; to ensure sustainable resources to support the
future demand
Open
Growing the Gas Demand and Unlocking Deepwater Potentials
SB 2P+2C Resource as at 1.1.2018 60%
40%
ShallowWater
DeepWater
water depth <200 m
water depth >200 m
0
500
1000
1500
2000
2500
20
19
20
20
20
21
20
22
20
23
20
24
20
25
20
26
20
27
20
28
20
29
20
30
20
31
20
32
20
33
20
34
20
35
20
36
20
37
20
38
20
39
20
40
Producing GCBDOpportunity Power SectorNon-Power Sector LNGs (export)Additional Sipitang TSGP (Non Power)
Long Term Sabah Gas Supply-Demand
Unit: MMscf/d
3
2
1
MLNG & FLNGs
Power Sector (inclSandakan Power)
Non-Power Sector
TSGP (Non Power)
Additional Sipitang
*Opportunity refers to discovered resources
Source: TOTAL Malaysia
OIL & GAS GENERAL OVERVIEW – AUGUST 2018© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKETCONCLUSION
MARKET PERSPECTIVES:
▪ Development of oil infrastructures, recycling, and dismantling services
▪ Know-how and technology with strong added value for exploration
(geology, geophysics, imaging, etc.)
▪ Drilling in deep sea, collect and treatment of gas
▪ EOR and marginal fields, capture of the CO2, etc.
▪ Challenge remains to develop Future Projects; Developing high contaminant gas resources at competitive cost
through technology solutions remains critical decision in order to provide competitive gas supply
GENERAL RECOMMENDATIONS
▪ Capacity of innovation (high technology in drilling, engineering of reservoirs, submarine engineering, design and
maintenance, equipment and high-technology applications)
▪ Find local partners referenced with Petronas
▪ Remain attentive to the evolutions of the conditions of eligibility for Sarawak
▪ attractive tax system and global incentive allowance (GIFT, Global Incentive For Trading) managed by the
MIDA. Agency which support investment in O&G,
▪ Maintaining consistent investment flow in exploration; to ensure sustainable resources to support the future
demand
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BUSINESS FRANCE MALAYSIAFrench Trade Commission / Kuala Lumpur Office EMBASSY OF FRANCE IN MALAYSIA
Laetitia Boura
Senior Trade Advisor
Shahreza SHAHRIR
Trade Advisor
Charles MVOGO
Trade Advisor
INDUSTRIES, ENERGY & CLEANTECH