Petronas: Attractive New Upstream Prospects For Investors

Malaysia’s national energy company offers low-cost, high-quality oil and gas resources to meet growing energy demand.
PETRONAS Executive Vice President and CEO of Upstream, Adif Zulkifli

Malaysia Petroleum Management (MPM) has launched the Malaysia Bid Round (MBR) 2021, a platform to offer 13 new offshore exploration blocks within proven hydrocarbon basins in Malaysia to interested investors.

These 13 blocks cover nine shallow-water and four deep-water acreages, with discovered resources opportunities (DRO) included in some of the exploration blocks. MPM, on behalf of the resource owner PETRONAS, manages Malaysia’s hydrocarbon assets.

Although there has been an accelerated shift toward renewables, petroleum demand is expected to remain robust in the coming years due to rising energy demand.

Thus, decarbonization of its core operations is critical in ensuring energy security, while helping countries to benefit from less emissions-intensive fuels.

To that end, there is a need to explore oil and gas in the right places and drill for what is known as “advantaged” barrels—oil that has the twin properties of being low in cost and carbon content.

PETRONAS Executive Vice President and CEO of Upstream, Adif Zulkifli, says advantaged barrels can be produced even when prices are low and when regulations are tightened, and is expected to be the source of the bulk of oil supply in the next few decades.

“For 2021, PETRONAS is offering attractive exploration blocks located within proven hydrocarbon basins. Our track record shows we have always been investment friendly as we continue to create a conducive environment to deliver value and promote sustainable development,” adds Adif.

Flexible Terms

Looking to draw in agile investors, MPM is enhancing its product offering to encourage collaboration and further investment in the industry, offering three types of new production sharing contracts (PSCs) under the MBR 2021.

The first, the Enhanced Profitability PSC Terms (EPT), includes a 70% fixed-cost recovery ceiling and linear profit sharing, based on a single oil and gas pool. Under this scheme, the contractor’s profit share will range between 30% and 90% depending on the asset’s profitability.

The second and third PSC—called the Small Field Assets (SFA) and Late Life Assets (LLA), respectively—provide opportunities for industry players with niche capabilities to monetize discovered fields with resource size of less than 15 million barrels of oil or less than 300 billion cubic feet of gas.

MPM also offers several nonfiscal enhancements for the exploration blocks such as larger block size, flexible bidding options, e.g. the option to merge two adjacent blocks under one PSC, transferable minimum work commitments between two adjacent PSCs and a phased exploration period.

MPM is hosting a virtual data room that is accessible now until August 6 to allow potential investors to conduct data room reviews within the bid round period. The bid evaluation exercise will take place between August and September. The contracts will be awarded to successful bidders by year-end.

MBR 2021 blocks on offer

Senior Vice President of MPM, Mohamed Firouz Asnan, says, “To date, some 40 billion barrels of oil equivalent (bboe) have been discovered in Malaysia, one of the highest in the region, with 20 bboe more waiting to be unlocked. This makes Malaysia a country with great potential for growth while providing investors flexibility and choice.

“Those seeking the right opportunities will not only balance but strengthen their portfolio, and we hope to see new investors, including existing players, bidding this year,” adds Firouz.

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