KUALA LUMPUR: Malaysia is set to remain an important location for oil and gas capital, with investment centred on upstream activities as well as decarbonisation and energy transition projects, according to BMI, part of Fitch Solutions Group.
In its latest assessment, BMI said upstream activity in Asia is expected to stay resilient, supporting growth in capital expenditure for exploration and production. Even with a softer oil and gas price environment, the firm noted that most spending in the sector continues to be directed to upstream exploration and production work.
For Malaysia, BMI expects PETRONAS Carigali Sdn Bhd to keep capital expenditure this year at around RM50 billion. The level of spending reflects investment needs tied to a series of greenfield and brownfield developments planned between this year and 2027.
Upstream drilling is also set to increase. In the development segment, PETRONAS plans to raise the number of development wells from 56 last year to 73 this year. The company has been active on the licensing front as well, signing 14 production sharing contracts with both Malaysian and foreign companies last year and holding equity positions in some of those contracts.
Investment needs abroad are also rising. BMI said capital requirements for PETRONAS’ overseas portfolio are expected to increase after the company secured new oil and gas blocks for exploration in Suriname last year. In addition, PETRONAS signed agreements covering upstream assets in Angola, Indonesia, Brazil, the United Arab Emirates, and Oman.
Decarbonisation-related projects are gaining prominence in the investment mix. In August last year, PETRONAS, Abu Dhabi National Oil Co, and UK-based Storegga entered into a joint study and development agreement to examine potential carbon capture and storage facilities in the Penyu Basin, off the east coast of Peninsular Malaysia. The agreement provides for investments to store five million tonnes of carbon dioxide per year by 2030 and includes shipping and logistics elements.
Looking further ahead, BMI said PETRONAS will need to allocate higher capital expenditure to Indonesia’s Masela liquefied natural gas project, where the company holds a 15% equity stake.
Taking these factors together, BMI expects Malaysia to continue to play a central role in oil and gas investment in the region, particularly in upstream projects and energy transition-related developments.
