New Business Monitor report predicts Malaysia's upstream segment could see good days ahead

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Business Monitor examines key trends in the oil & gas sector in Malaysia and provides short- and long-term forecasts for the industry in the newly published Malaysia Oil & Gas Report.

industry analysis, business forecasts, business monitor
The expansion of downstream capacity could be challenging, as Malaysia would face fierce competition from neighbouring Singapore.

Business Monitor has just released its latest findings on Malaysia’s Oil & Gas sector in its newly-published Malaysia Oil & Gas Report.

Malaysia's upstream segment could see good days ahead in the short-to-medium term as the completion of both greenfield and brownfield developments brings new volumes of oil and gas online, Business Monitor predict in their new Report. New gas supplies will underpin continued expansion in the country's liquefied natural gas production based in Sarawak. Consumption growth will limit some of the export gains to be made from growing output, though a reduction of oil and gas subsidies would see a slowdown in the rate of this. The expansion of its downstream capacity could be more challenging, as it would face fierce competition from neighbouring Singapore.

Key trends and developments covered by the report include:

■ Business Monitor’s expectations for growth in Malaysia’s oil and gas reserves are underpinned by resource upgrades stemming from exploration and development activities in three areas: deepwater, marginal and stranded fields, and enhanced oil recovery (EOR) projects in mature fields.

■ Oil and gas production are set to grow, thanks to the development of large discoveries made in recent years. For oil in particular, investment into marginal fields could support a short-term increase in production until larger and more complex deepwater projects come on-stream.

■ Based on projects in pipeline, Business Monitor expect oil production to continue climbing upwards from an estimated 625,140b/d in 2013 to a forecasted peak of 899,560b/d in 2018. However, the small scale of these fields means that their development can only sustain the country's output for a limited time. However, with the lack of large discoveries able to replace dwindling reserves from mature fields, they do not expect Malaysian oil production to reach the 1mn b/d level, with production levels starting to fall post-2018 unless high and continuous development of new projects brings significant new fields online and sustains the country's increasing production. Over the longer term, deepwater and greenfield developments will therefore remain necessary to maintaining oil production growth past its current expected peak in 2018.

■ A string of prolific discoveries and major projects set to come online between 2014 and 2018 would see gas production continue on an upward trend. Nearly all of these new projects are off the coast of Sarawak, East Malaysia, which will in turn support liquefied natural gas (LNG) production growth at Petronas' LNG complex.

■ Business Monitor are expecting the uptrend in gas production to continue in the short-to-medium term. From an estimate of 63.6bcm in 2013, they project output to hit 75.9bcm in 2018 and continue to climb to 79.7bcm by 2020. Although they currently forecast for a slight fall from 2021 based solely on projects in the pipeline, they highlight that there is significant upside risk to the tail-end of their forecasts to 2023. These
come from recent discoveries made that could see a FID within 2014 to 2016. The forecasts will be revised once more light is given on development plans for announced discoveries.

■ Consumption of both oil and gas is set to rise in the short term as demand grows in tandem to economic expansion and facilitated by a generous subsidy regime. However, Business Monitor expect growth to slow on expectations that subsidies will be gradually reduced over time owing to fiscal necessity, thereby correcting some of the excesses in domestic oil and gas consumption. In Q413, the government already cut fuel subsidies for the first time in more than two years, as part of its wider efforts at reducing its budget deficit. The subsidy on petrol and diesel were cut by 20 sen (6 cents) a litre each, to 63 sen a litre and 80 sen a litre respectively.

To find out more about this report please click here.

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Business Monitor is a leading, independent provider of proprietary data, analysis, ratings, rankings and forecasts covering 200 countries and 24 industry sectors. It offers a comprehensive range of products and services designed to help senior executives, analysts and researchers assess and better manage operating risks, and exploit business opportunities.

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Sarah Sutcliffe
Business Monitor International
since: 01/2011
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