KUALA LUMPUR (Dec 13): BMI, a Fitch Solutions company, said that Malaysia’s upstream sector is gathering momentum as investors commit to exploration and production investments.

International and regional oil companies, including Shell, Inpex Corp, and PTT Exploration and Production (PTTEP), are reinforcing their commitment to investing in Malaysia’s upstream sector, following the government's launch of successive petroleum bidding rounds in 2021, 2022, and 2023.

In a report on Tuesday, the firm said that currently, more than 30 foreign companies, including oil and gas majors and independent players, are currently operating in Malaysia’s upstream business.

It said Malaysia's bidding round 2021 (MBR 2021) offered 13 exploration blocks, of which six were awarded.

The six blocks awarded to both existing and new players were SB412, 2W, X, SK427, SK439, and SK440.

BMI said Petronas had signed production sharing contracts (PSCs) for nine out of fourteen blocks and three out of six discovered resource opportunities (DROs) offered under the MBR 2022.

It said this represented the highest number of awards since 2009.

“The MBR 2023 is offering 10 exploration blocks and two DROs.

“More than 50 oil and gas companies are reported to have participated in the MBR 2023, according to Petronas.

“The awards for the MBR 2023 blocks are expected to be announced in 2024,” it said.

BMI said that in total, Malaysia had awarded 17 PSCs during the MBR 2021 and MBR 2022, excluding other PSCs separately signed with TotalEnergies and Shell.

BMI said new PSCs are providing the impetus for increased investments in Malaysia’s upstream exploration and production.

The firm said that in 2023, Petronas alone is reported to have spent RM10.5 billion in the upstream segment, not including RM2.6 billion in the natural gas business.

“Apart from Petronas, a significant portion of investments comes from Shell, which announced a final investment decision on the Rosmari and Marjoram sour gas project in September 2022.

“Shell also signed three new PSCs for exploration blocks offered in both the MBR 2021 and MBR 2022.

“Additionally, Shell has signed two new PSCs for the SB2K and SB2V blocks in Sabah,” it said.

BMI said Thailand’s PTTEP is emerging as one of the largest foreign investors, followed by Japan’s Inpex Corp, which signed two PSCs for exploration in the MBR 2022.

It said other foreign companies, including Skye UMDP Exploration, SapuraOMV Upstream, Topaz Number One, and Longboat Energy, are expanding their presence in Malaysia by investing in exploration blocks offered in the MBR 2021 and MBR 2022.

“These developments all indicate renewed interest and long-term commitment from foreign investors in Malaysia’s upstream oil and gas exploration,” it said.