Image source- energyvoice.com | The Petronas Towers in Kuala Lumpur, Malaysia.

Malaysia’s 2022 oil and gas bid round was remarkable, attracting fresh investment, new upstream explorers, and new ideas to Southeast Asia’s most successful market mix. Indeed, other Southeast Asian countries should take note as Malaysia also launched its 2023 round, which will see more investors queuing up.

Malaysia Bid Round (MBR) 2023 was launched last Wednesday, the same day that new acreage was officially awarded from MBR 2022.

Nine out of 14 exploration blocks were successfully awarded, and three Discovered Resources Opportunities (DROs), making the round a success, Robert Chambers, APAC-focused upstream expert, told Energy Voice.

The results marked the highest number of PSCs awarded in Malaysia within a year since 2010. Industry analysts agreed it was a strong outcome in a world increasingly focused on transitioning from exploration to new oil and gas.

“Overall, Malaysia continues to offer exploration acreage in mature and proven areas, where exploration success would see discoveries that could be developed through existing infrastructure and potential access to global LNG markets through the Malaysia LNG (MLNG) complex,” said Chambers.

“Malaysia Petroleum Management (MPM), which manages the rounds, have done a great job by understanding their relative position and creating competitive fiscal terms for some specific opportunities. They have also run a consistent and reliable bid round process. There is a lot for other countries in Asia to learn from,” he added.

Andrew Harwood, Asia Pacific research director at Wood Mackenzie, noted that Malaysia’s state-backed upstream energy company Petronas Carigali dominated the round, winning interest in every block awarded. However, “we think Petronas’ regulatory arm, Malaysia Petroleum Management (MPM), will be the most pleased with the awards,” Harwood told Energy Voice.

After several lackluster bid rounds in the last 18 months, MPM has reinvigorated Malaysia’s acreage offerings by responding to industry feedback and showing a more open approach to potential investors.

Harwood said an improved fiscal offering, better access to data, and greater industry engagement have resulted in nearly two-thirds of the blocks offered being awarded.

“A key objective of MBR 2022 for MPM was to bring experienced new explorers to Malaysia. The awards see the return of Japan’s INPEX (TYO:1605), in addition to new entrants, not only to Malaysia but also to Southeast Asia’s exploration sector – Norwegian independent Longboat Energy (LON: LBE) was joined by new players Topaz Energy and Perth-headquartered Skye Energy, alongside Malaysian service company UMD Petroleum,” he added.

Moreover, significant players, such as Shell (LON: SHEL) and Thailand’s PTT Exploration & Production (PTTEP) (BKK: PTTEP), continued to add acreage and show commitment. Harwood said PETROS, the Sarawak state’s E&P company, grabbed non-operating stakes in five Sarawak PSCs, indicating its upstream ambitions.

The MBR 2023 acreage offering emphasized the mature Peninsular Malaysia region, allowing smaller, local players to get involved.

“Malaysia benefits from good subsurface prospects, proven by strong exploration performance over the last decade. But the overall above-ground investment environment has the biggest impact on where an investor deploys capital. Malaysia’s willingness to engage with investors, provide a supportive environment, and evolve its offering makes it one of the most attractive upstream regions in Southeast Asia,” added Harwood.

Oil and Gas Exploration Success – Malaysia Leads Southeast Asia

Between 2020 and 2022, consultancy Rystad Energy estimates show that more hydrocarbon volumes were discovered in Malaysia than in the rest of Southeast Asia combined. “Indeed, over this period, just PTTEP, as an operator, has discovered more in Malaysia than Indonesia’s total. Though Indonesia, with the Timpan field, has the largest Southeast Asia discovery over the period, Indonesia has just one other discovery larger than 35 million barrels of oil equivalent. In contrast, Malaysia had 10 discoveries over 35 mmboe during 2020-2,” Readul Islam, an Asia upstream specialist at Rystad Energy, told Energy Voice.

“For the explorations, after all, is said and done, discoveries are their holy grail, and in that respect, Malaysia has shown outstanding results in Southeast Asia,” he added.

Meanwhile, realizing the likely content of future discoveries, Malaysia continues signing research studies targeting carbon mitigation, which will be attractive in the energy transition context, noted Islam.