INTERVIEW: Petronas expects domestic oil, gas output to cross 1.8 mil boe/d this year, says MPM

Petronas' upstream business Malaysia Petroleum Management expects the company's domestic oil and gas production to cross 1.8 million b/d of oil equivalent in 2023 and raise its overseas portfolio to 700,000 boe/d by 2030, its senior vice president Mohamed Firouz Asnan told S&P Global Commodity Insights in an interview at the Energy Asia 2023 conference in Malaysia.

During the interview, Firouz said that Petronas will look out for areas of collaboration beyond its shores based on geological needs with a focus on big oil, adding that "We are in a process switching in and switching out, and we exited from Myanmar, South Sudan ... our portfolio doesn't stay still.

"As a company, we're quite gassy. So, we want to also balance it. Because oil still provides that quick monetization. Gas takes a bit longer, but gas is more sustainable," he said.

Although oil and gas prices have tapered off compared with last year, Firouz said that Petronas' exploration & production investments will remain "steady" rather than reacting to spot prices.

In 2022, Petronas doubled its profit after tax to RM101.6 billion, or $22.59 billion -- its strongest financials ever -- amid higher global oil and gas prices and increased sales, S&P Global Commodity Insights reported previously.

"Good prices will come [and] go. But over time it should be okay. It should be still good if we can make sure that our cost is the most optimal and we can do things as fast as we can -- from the time we discover to the time we develop the plan to the time we get first oil," he said.

He added that Malaysia will continue to be an attractive place for oil and gas investors due to its resources and lower cost.

Malaysia Bid Round 2023

Firouz also said that the "credentials" and "track records" of companies -- particularly in areas of sustainable production of oil and gas -- will be considered in the ongoing Malaysia Bid Round 2023. The Malaysia Bid Round 2023 was officially launched on Feb. 15, 2023, with ten exploration blocks and two Discovered Resource Opportunities (DRO) clusters on offer.

Six of the exploration blocks are located in offshore Peninsular Malaysia (PM-341, PM-342, PM-417, PM-428, PM-443 and PM-445), three blocks are in shallow to deepwater Sarawak (SK-330, SK-510 and 5E) and one block is in shallow water Sabah (SB-403). The available DROs include the Chenang Cluster in offshore Peninsular Malaysia and Bambazon Cluster in shallow water Sabah, S&P Global Commodity Insights reported previously.

Newer companies led by reputable management will also be welcomed, he added.

"We always believe that it's better to go for repeat business ... we want to keep the partners that we have. At the same time, we see the potential of getting new players ... who have niche capabilities. That's why we seek out players who have the ability to manage late-life assets," Firouz said.

"We have fields... 40, 45-year-old fields, still producing. That's sustainability, rather than every five years you build a platform."

Earlier this year, Petronas had also signed Production Sharing Contracts for nine exploration blocks and three clusters of DROs marketed under last year's bid round.

Green opportunities

As Malaysia has significant gas resources, carbon capture and storage technology can help Petronas produce sweeter gas more efficiently, as opposed to blending it with lower carbon content previously, said Firouz.

Older fields, such as the Bujang, Inas, Guling, Sepat, and Tujoh (BIGST) cluster, found in the 70s can now be developed owing to CCS technology as well, he added.

However, Firouz also recognized that as such green solutions often come at a financial cost for operators, MPM is working to alleviate this.

For instance, the costs of separating CO2 in the Petronas' Kasawari CCS project located in Block SK316 will be treated under its respective PSC.

"This is all within (MPM's) purview. As much as possible, we'll enable (CCS) development using creative or innovative commercial structure to enable it," said Firouz. "Because at the end of the day, it's all about cost, right? CCS involves costs. Then the question is who will pay for it, right? Through the PSC, we're able to address that issue."

He said operators across different projects should also cooperate and share learning points in adopting "big" and "expensive" technologies like CCS, adding that MPM has been hosting summits to exchange best practices in these areas.

"(Operators) can compete for blocks, but after (they) get the block, we can collaborate," he said.