BMI: Malaysia remains key destination for PTTEP investments

KUALA LUMPUR (Aug 14): Malaysia will remain a key destination for Thailand’s national oil company PTT Exploration and Production’s (PTTEP) investments in both the short and long term, said BMI today.

It said PTTEP holds considerable assets in Malaysia and is seeking to strengthen its exploration and production activities in the neighbouring country while pursuing additional natural gas assets.

“PTTEP is expected to announce the final investment decision (FID) for the development of the Lang Lebah gas field, located in the SK410B block, in 2024. First gas from the project is anticipated in 2027,” BMI said in a note today.

Thailand’s oil and gas investments, led by PTTEP, in the Southeast Asia region are poised to increase in 2024 and beyond.

The outlook for PTTEP’s oil and gas investments in Southeast Asia is expected to continue rising before the end of the decade, as the company has already committed to further investments in neighbouring Malaysia, Myanmar and Vietnam.

PTTEP, which holds a 42.5 per cent interest through its subsidiary PTTEP HK Offshore, alongside KUFPEC Malaysia (42.5 per cent) and Petronas (15 per cent), has completed the front-end engineering design, which includes a carbon capture and storage project.

Natural gas recovered from the Lang Lebah project is intended to supply the Bintulu liquefied natural gas (LNG) project and other industries in Sarawak state and is expected to produce 3.3bcm/y of natural gas at its peak.

“It is highly likely that PTTEP will proceed with the Lang Lebah project because it complements its LNG investments in Malaysia and long-term natural gas supply strategy,” BMI said.

In 2017, PTTGL Investment Ltd (PTTGLI), a joint venture between PTTEP and PTT Public Company Ltd, acquired a 10 per cent equity interest in Petronas LNG 9 Sdn Bhd (PL9SB), which operates a 3.6 mtpa train at the Bintulu LNG complex.

PTTEP is still conducting exploration activities in various blocks, including SK410B (LLB/Paprika-1), SK417, SK314A, SK438, SK405B, PM415, and PM407.

BMI said future investments in Malaysia would largely depend on commercially viable oil and gas discoveries.

The Malaysia-Thailand Joint Development Area (MTJDA) is another joint-venture project in which PTTEP has committed to invest.

PTTEP and Petronas have received approval from the Malaysian and Thai governments to extend the production period for another 10 years until 2039. PTTEP and Petronas aim to increase gas production from the MTJDA by 0.52 billion cubic metres from the A-17 and A-18 blocks.

Southeast Asia’s national oil companies to lead oil and gas capex growth in 2024  

In a separate note, BMI forecast that the capital expenditures (capex) planned by the 15 key Asian oil and gas companies it monitors will reach US$136.4 billion in 2024, seeing a moderate increase of 4.8 per cent over the levels observed in 2023.

It added that Petronas’ capex was estimated to have increased by 5.4 per cent year-on-year to US$11.57 billion in 2023 from the previous year and capex requirements for both domestic and international operations have increased in 2023.

In domestic operations, BMI said Petronas’ capex increased by 41 per cent y-o-y from the previous year due to investments in the 2.0 million tonnes per annum nearshore floating LNG project and carbon capture, storage and utilisation project integrated with the development of the high CO2 Kasawari gas field in Sarawak.

“Capex requirements for domestic upstream projects are expected to rise to US$13.2 billion in 2024 as Petronas has committed to investments in overseas projects. Capex requirements for investments may rise significantly in 2025 if Petronas goes ahead with the Lang Lebah natural gas project,” it added.

BMI said investments in overseas operations are expected to increase further in 2024 since Petronas and its partners, including TotalEnergies’ EP Angola Block 20 and Sonangol Pesquisa e Produção SA have reached the FID to develop the Cameia and Golfinho fields in Block 20/11 located offshore Angola.

Petronas holds a 40 per cent interest in the project. Exploration capex in Indonesia is expected to rise in 2024 since Petronas’ subsidiary, Petronas E&P Bobara Sdn.Bhd, signed a production sharing contract for the Bobara Working Area located offshore West Papua, Indonesia, in May 2024.

Petronas E&P Bobara operates and holds a 100 per cent stake in the Bobara Working Area.

“Malaysia is expected to see a steady increase in upstream exploration expenditures in 2024 and beyond since the government has already launched successive rounds of petroleum bidding since 2021. Foreign companies are expected to maintain a higher level of exploration expenditures following oil and gas discoveries in 2023,” BMI said.  – Bernama