Malaysia: Asia Pacific’s oil and gas hub?
“Our aspiration is one and the same and that is for Malaysia to be the oil and gas hub for the region. And this can only be achieved when the industry is represented by capable players and supported by value-adding industry associations,” says Tan Sri Dato’ Shamsul Azhar Abbas, President and CEO of Petronas, ahead of the second Malaysia Oil & Gas Services Exhibition And Conference (MOGSEC).
MOGSEC 2014, held on the 22-24th September at the Kuala Lumpur Convention Center, aimed to cement Malaysia’s profile as the regional hub for oil and gas service and was attended by both large and small Malaysia-based companies from a range of functional areas. Nearly 500 Malaysian oil and gas companies were in attendance, along with key players Petronas, MMC Oil and Gas, Muhibbah Engineering, SapuraKencana Petroleum, UMW Oil and Gas, PBJV Group, Bumi Armada, Technip and ExxonMobil.
Partnerships to Tackle Declining Local Reserves
The exhibition comes at a time where Malaysian oil reserves are declining. New and innovative technologies are being adopted and looked at by Petronas to extend the production life of Malaysian fields. Petronas is now looking to Malaysian service providers to provide the level of experience and expertise required. As executive director for Petronas, Datuk Mohamad Idris Mansor, explains, “MOGSEC 2014 plays a critical and effective role, bringing together various industry players to converge and develop strategy towards a more dynamic and sustainable oil, gas and energy sector.”
Petronas, as the custodian of the country’s hydrocarbon resources, is now looking at clear and aggressive strategies to arrest the decline and enhance the production of existing fields. The focus is on techniques such as enhanced oil recovery (EOR) and deepwater technology to extend the life of marginal fields.
Idris, who was speaking at the first day of MOGSEC 2014, explained the plan for implementation of EOR in Malaysia: ‘there are currently ten EOR projects in the pipeline at various stages, and the entire program is scheduled to be rolled out in phases over the next decade.”
The first application of EOR technology — a large-scale project developed at a cost of RM10 billion (USD 3.07 billion) — is being implemented at the Tapis oil field, offshore Terengganu. “It has the potential to boost production from Tapis by up to 35,000 barrels per day from the present three to four thousand barrels per day,” Idris explains.
In addition to EOR, Petronas is looking to risk service contracts (RSCs), in order to share some of the financial risks inherent with depleting fields. They are currently looking to niche exploration and production (E&P) companies and selected local oil and gas service contractors to partner with. To date, Petronas has awarded six RSCs, three in production while the remaining three under development.
With only the ‘high reaching fruits’ to play for, Petronas is in need now more than ever for local partnership to take on these challenges.
Shamsul states that “we must recognise that the oil and gas industry is technically challenging and capital intensive; and it may not suit the faint hearted. While Petronas will continue to provide stewardship and opportunities, these will be met by service providers who are able to continuously enhance their capabilities, innovate and remain competitive”.
Events such as MOGSEC are becoming increasingly important to catalyse these partnerships between operators and service companies for the benefit of local production rates.
Local Partnerships for Export
As well as tackling local declining production, local partnerships are important to promote Malaysian Oil and Gas services abroad.
The Chairman of the MOGSEC 2014 Taskforce, Sofiyan Yayha, explains that Malaysian Oil and Gas companies can exist and be profitable as niche service providers in Malaysia, but staying in this comfort zone and not partnering can hold Malaysian service providers back.
MOGSEC 2014 is set to catalyse Malaysia’s standing as the regional oil and gas hub. It looking to local partnership for tacking the countries decreasing reserves as well as making it more attractive to oversees export.
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