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MALAYSIA 2015
Executive Chairman
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DIALOG GROUP
Up and away
SEE Kok Yew
President
EXXONMOBIL EXPLORATION AND PRODUCTION MALAYSIA
Maximise your assets’ value
Maen RAZOUQI
Vice-President and General Manager for Malaysia
SCHLUMBERGER
THE OIL & GAS YEAR MALAYSIA 2015
The Who’s Who of the Global Energy Industry
In partnership with:
12 20
CONTENTS
Diplomacy & Politics Exploration & Production
While balancing a national agenda promoting Low oil and gas prices are denting the operations
economic transformation through lowering of national and international oil companies glob- 1
subsidies and taxes with an international pro- ally. With cuts to capital and operational expen-
Content partners:
MALAYSIA 2015
gramme for progressing a common market ditures planned by Malaysia’s state-owned
for member states of the Association of Petronas for 2015, on the back of heavy fourth-
Southeast Asian Nations, Malaysia’s govern- quarter losses the previous year, the national oil
ment must also deal with the economic im- company must weigh its upstream priorities. As
pact of depressed oil prices, which at the be- development continues at major deepwater plays
ginning of 2015 reached new six-year lows. in the country, brownfield sites are to be rejuve-
nated through production enhancement efforts.
The Who’s Who of the Global Energy Industry www.theoilandgasyear.com THE OIL & GAS YEAR | MALAYSIA 2015
MALAYSIA 2015
The Oil & Gas Year is audited by BPA Worldwide
38 48 58
CONTENTS
The Gas Year Finance & Consulting The Year’s Focus: Pengerang
Integrated Petroleum Complex
As the second largest exporter of LNG glob- As a net hydrocarbons exporter, Malaysia faces
2 ally after Qatar, Malaysia must weather con- a difficult 2015. Yet despite a downwards revi- In April 2014, after two rounds of delays, state-
ditions posed by sustained low oil prices, re- sion of growth prospects by the World Bank owned Petronas approved a $16-billion final
MALAYSIA 2015
flected in LNG prices at a lag of several and a struggling national currency on the back investment decision for the Refinery and Petro-
months. National oil company Petronas has of low oil prices, the country will stick to its chemical Integrated Development project. The
stated that its most critical infrastructure GDP growth target of 5-6 percent for 2015. project is a cornerstone of the Pengerang In-
projects will advance unaffected, including State-owned Petronas says it still intends to tegrated Petroleum Complex, which underlines
two floating LNG facilities and a new train pursue most of its planned projects, with major the goal of establishing Malaysia as a regional
at its onshore complex in Bintulu, Sarawak. domestic developments planned both in the oil storage and trading centre by 2020.
upstream and further down the value chain.
54 VIEWPOINT: Market re-evaluation. Aaron Tan Wei Min, 75 INTERVIEW: Ngadni Temon, Energy Quest
Malaysian Industrial Development Finance 75 IN CONSUMPTION: Gas exports and consumption
55 INTERVIEW: Ismed Darwis, EY Malaysia in Malaysia, 1990-2035
55 IN GDP: Malaysia's GDP per capita, 2006-2014 76 VIEWPOINT: Drill past the drop. Rohaizad Darus, UMW
56 MARKET ANALYSIS: Special purpose equity. Tan Theng Oil & Gas
Hooi, Deloitte 77 INTERVIEW: Scott Tidemann, Petrosys
67 VIEWPOINT: Core contributors. Frederico Gil Sander, 78 ARTICLE: Brownfield projects a likely alternative. New
World Bank opportunities for oilfield services companies in brownfield
developments and deepwater plays
58 THE YEAR’S FOCUS: Pengerang Integrated Petroleum 79 COMMENT: Technology at sea. Technological expansion
Complex drives Malaysia’s upstream production, counteracting a
natural decline at the country’s maturing assets
59 ARTICLE: Downstream dream no longer deferred. 79 ILLUSTRATION: Offshore production platform models
Pengerang will host major downstream investments 81 ILLUSTRATION: Tapis enhanced oil recovery project
60 PROJECT HIGHLIGHT: Refinery and Petrochemical 82 VIEWPOINT: From the bottom up. Syed Salikhin Alsagoff,
Integrated Development Bumi Wangsa
60 IN CONTRACTS: Key contracts awarded by Petronas
61 INTERVIEW: Tan Sri Ngau Boon Keat, Dialog Group 84 ASSOCIATED SERVICES
62 MAP: Midstream and downstream infrastructure
63 PROJECT HIGHLIGHT: Pengerang Independent 85 ARTICLE: Back to basics. Malaysia’s associated
Deepwater Petroleum Terminal services sector looks to ride out the oil price slide
64 ILLUSTRATION: Pengerang Independent Deepwater 85 IN CONSUMPTION: Oil consumption in the Asia-Pacific
Petroleum Terminal region, 2010-2013
66 INTERVIEW: Mohd Yazid Ja’afar, Johor Petroleum 86 COMMENT: The promise of ageing assets. Efforts to
Development Corporation maximise production across Malaysia’s upstream sector
87 INTERVIEW: Raza Amin, DNV GL
68 OILFIELD SERVICES 88 INVESTOR SPOTLIGHTS: Olio Resources, Wood Group
PSN, Inext Petroleum & Oilfield Services
69 ARTICLE: Ambition in the face of adversity. Oilfield 89 INTERVIEW: Laurent Alessio, Leap Energy
services players in Malaysia look to flourish both locally and 90 VIEWPOINT: A matter of education. Azdi bin Abass,
globally, despite cuts to upstream expenditure in 2015 Octagon Petroleum Technology
69 IN COMPARISON: Malaysian oil production and 91 COMMENT: Structural support. Petronas develops its
consumption, 2003-2013 vendor development programme, which seeks to foster the
70 VIEWPOINT: Maximise your assets’ value. Maen Razouqi, expansion of small and medium-sized enterprises
Schlumberger 91 INVESTOR SPOTLIGHT: Valser Oil & Gas
71 COMPANY PROFILE: SapuraKencana Petroleum
72 COMPANY PROFILE: Deleum 92 ENGINEERING & CONSTRUCTION
73 COMMENT: Slick application. Methods for maximising
production and flow from wells 93 ARTICLE: Work in progress. Malaysia’s engineering and
74 MARKET ANALYSIS: Domestic services. Ramlan Malek, construction sector is host to large, technically challenging
Malaysian Oil & Gas Services Council projects in both the upstream and downstream
THE OIL & GAS YEAR | MALAYSIA 2015 www.theoilandgasyear.com The Who’s Who of the Global Energy Industry
THE OIL & GAS YEAR MALAYSIA 2015
The Who’s Who of the Global Energy Industry
68 92 108
CONTENTS
Oilfield Services Engineering & Construction Marine Services
As Malaysia seeks to develop an internationally In a period marked by budget cuts in the pub- With state-owned Petronas having revised its
recognised oilfield services sector, declining lic and private sectors, Malaysian engineering 2015 expenditure budgets, Malaysia’s marine 3
oil and gas prices have dented the confidence and construction is supported by a raft of services sector will look to carefully monitor the
MALAYSIA 2015
of major sector players and reduced overall major projects underway throughout the hy- national oil company’s upstream intent. This said,
national spending in the industry. Yet while drocarbons supply chain. Multi-billion-dollar, nearly all of Malaysia’s oil and gas production
cost-consciousness will be a strong theme in technically challenging domestic investments comes from offshore fields in the South China
2015, the country’s primary oil and gas projects include complex deepwater projects, floating Sea. Continued investment in hydrocarbons pro-
will demand technological development and LNG facilities and the Refinery and Petro- duction, both in shallow waters and at deepwater
efficient oilfield utilisation, aimed at maximis- chemical Integrated Development project. plays, will prop up the domestic maritime market,
ing production levels over the long term. from drilling to offshore support vessel provision.
109 IN PRODUCTION: Malaysia’s industrial production index 112 COMMENT: To import, or not to import. The impact of low
95 VIEWPOINT: Time to innovate. Abd Rashid Sidek, Malaysian oil prices on Malaysia’s net export receipts
Oil & Gas Engineering Council 113 INTERVIEW: Lim Chern Yuan and Daniel Bong, Yinson
96 INTERVIEW: Max Bellotti, Saipem Asia 114 COMMENT: Oil price slump hits OSVs. The gradual decline
97 PROJECT HIGHLIGHT: Petronas Malaysia LNG Train 9 in international oil prices has had repercussions for
99 COMPANY PROFILE: MMC Oil & Gas Engineering Malaysia’s marine services sector
100 MARKET ANALYSIS: Good market for brownfields. Ken 115 COMPANY PROFILE: Icon Offshore
Crawford, Aquaterra Energy 116 INVESTOR SPOTLIGHTS: Tresenergy, Opulens,
100 IN REVENUES: Employment in Malaysia by sector, Oceancare, VH Energy
January-June 2014 117 IN DISCUSSION: Does Malaysia have what it takes to be
101 COMPANY PROFILE: Technip the oil and gas services centre for the Asia-Pacific region?
103 COMPANY PROFILE: Eversendai Icon Offshore, Olio Resources
104 INTERVIEW: Abdul Rahman Hariri, Winmore Engineering 118 COMPANY PROFILE: Bumi Armada
105 ARTICLE: The future looks bright. Engineering companies, 109 IN EARNINGS: Earnings per share of key service providers
both international and local, are working on new LNG in Malaysia, 2013-2015
and petrochemicals plants and refurbishing older facilities
106 COMPANY PROFILE: SBM Malaysia 120 EXECUTIVE GUIDE
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Extracting intelligence
INTERNATIONAL
Refining communication
The Who’s Who of the Global Energy Industry www.theoilandgasyear.com THE OIL & GAS YEAR | MALAYSIA 2015
THE YEAR IN REVIEW
INTERVIEW
to establish their regional bases? vate sector investments, while the government
Malaysia is the second-largest oil and gas pro- works to provide the necessary infrastructure
ducer in the Association of Southeast Asian to facilitate their development.
Nations (ASEAN) and one of the world’s top The federal and state governments have
LNG producers. The industry is characterised co-operated to facilitate investment in the form
by Petronas’ stability and an emphasis on en- of tax incentives. They have also helped support
hanced oil recovery, marginal fields and deep- infrastructure and ease bureaucratic processes.
water developments, making Malaysia an at- This shows the long-term perspective and the
tractive market for higher-value services. importance of this industry for Malaysia.
With a mature upstream hydrocarbons in-
dustry, the country possesses a strong ecosystem How has Malaysia progressed towards achiev-
ing its goal of becoming a regional centre for
oil and gas services and equipment?
We saw a clear trend Malaysia has secured a number of significant
achievements towards realising its goal. Since
of services and 2011, the country has hosted the 2014 Offshore
Technology Conference Asia in Kuala Lumpur.
equipment companies Kuala Lumpur was also registered as part
of the World Energy Cities Partnership pro-
acquiring assets while gramme in the same year. As a result, a good
working relationship has been developed be-
also expanding their tween Malaysia and all major international cen-
tres around the world to ensure a continued
services capabilities. flow of investments and co-operation.
On the domestic front, a number of signifi-
cant projects were carried out to encourage
of services and equipment companies that the involvement of local universities in research
support the needs of the oil and gas value activities for the industry. These initiatives involve
chain, both domestically and regionally. getting more graduates into the oil and gas in-
The period between 2011 and 2014 saw a dustry by promoting internships in the services
significant increase in capital expenditure di- and equipment sector and encouraging industry
rected toward enhanced oil recovery and mar- players to share industry experience with uni-
ginal field developments. Throughout this versities to improve the quality of graduates.
period, we saw a clear trend of services and
equipment companies acquiring assets while How will lower oil prices impact the domestic About MPRC
also expanding their services capabilities. services and equipment sector? An agency of the Prime Minister’s De-
No one is exempted from the impact of lower partment, MPRC’s initiatives include
How is the investment climate for major mid- oil prices, not even major players. The same talent and technology development,
stream and downstream projects? could be said about Malaysia. While the degree encouraging foreign and domestic in-
In addition to growth in upstream exploration of impact may be different depending on each vestment and promotional activities
and production, the midstream and downstream company’s circumstances, smaller services such as participating in international
sectors also receive among the biggest invest- providers stand to be impacted the most. events and conducting business mis-
ments in capital expenditure. Many international companies have an- sions to target markets. In view of
The importance of this industry is reflected nounced specific responses on a local level, Malaysia’s chairmanship of ASEAN in
in the recent budget reading in October 2014 but we have not seen such announcements 2015, MPRC is focusing on collabora-
by the prime minister, in which he reaffirmed yet. Many are analysing the situation or stream- tions between oil and gas services and
the government’s commitments to the lining processes and improving their efficiency equipment markets in ASEAN countries.
Pengerang Integrated Petroleum Complex and in order to generate a competitive solution.
The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | MALAYSIA 2015
THE YEAR’S AWARDS – MALAYSIA 2015
6
UPSTREAM PROJECT OF THE YEAR
THE YEAR’S AWARDS – MALAYSIA 2015
The largest full-field enhanced oil recovery project in Malaysia and one of the largest in
Southeast Asia, the Tapis project is being led by ExxonMobil in partnership with national oil
company Petronas. The field has been producing since the late 1970s with a total production to
date of around 400 million barrels of oil. Tapis-blend crude, with an API gravity of 45 degrees
and very low sulphur content, is one of the major benchmark crudes in the region. The $3.1-
billion project is expected to recover an additional 10-15 percent of the field’s crude oil.
THE OIL & GAS YEAR | MALAYSIA 2015 The Who’s Who of the Global Energy Industry
MALAYSIA AT A GLANCE
CAMBODIA VIETNAM
PHILIPPINES
MALAYSIA AT A GLANCE
SARAWAK
Seremban
MALAYSIA
Malacca Kuching
Johor Bahru
SINGAPORE
INDONESIA INDONESIA
National capital
City
International boundary 0 100 200 400
State boundary
Kilometres
© 2015 The Oil & Gas Year Ltd., The Oil & Gas Year Malaysia 2015. All rights reserved.
Political system: Constitutional monarchy with a bicameral parliament Oil production: 657,000 barrels of oil per day (2013)
consisting of an elected lower house and unelected upper house
Oil reserves (proven): 3.7 billion barrels (2013)
Ethnic groups: Malay (50.4 percent); Chinese (23.7 percent); Indigenous (11
percent); Indian (7.1 percent); others (7.8 percent) Natural gas reserves (proven): 1.1 tcm (38.8 tcf) (2013)
Legal system: Mixed legal system of English common law and Islamic law Natural gas production: 69.1 bcm (2.44 tcf) (2013)
ECONOMY Sources: CIA; World Bank; Bank Negara (Malaysian Central Bank); BP 2014
Currency: Malaysian ringgit (MYR1: $0.301) Statistical Review, Malaysia Statistics Department, ASEAN Briefing
The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | MALAYSIA 2015
THE INVESTORS INDEX
RESPONSE
IN
How would you describe the How would you rate the ease of How would you rate the level of
policies of this government vis-à- doing business in this country? transparency in this oil and gas
vis the oil and gas industry? market?
Very easy 15.4 %
Pro-business 53.9 % Easy 61.5 % Very transparent 1.5 %
Pro-business, but restrictive 29.2 % Difficult 12.3 % Transparent 73.9 %
Anti-business, but accommodating 13.9 % Extremely difficult 10.8 % Not transparent 21.5 %
Anti-business 3.1 % Corrupt 3.1 %
Extremely
difficult Very easy
10.8% 61.5%
How would you rate the ease of Difficult How would you rate the level of
starting an oil and gas business 12.3% political and economic stability
in this market? in this oil and gas market?
05 Ottawa approves the 05 Petronas signs a deal 11 The Ophir Production 18 Spain’s Técnicas
acquisition of Talisman with the Canadian joint venture signs Reunidas is awarded a
Energy’s British province of British seven-year small field 50-month, $1.5-billion
Columbia gas assets by Columbia for a 62- risk service contract to contract as part of the
Petronas for $1.5 billion. percent stake in the develop the Ophir Refinery and
Pacific NorthWest oilfield off Terengganu. Petrochemical
LNG project. Development project to
engineer, supply
and build part of
07 Petronas agrees to 14 Barakah Offshore 10 An explosion the complex.
THE YEAR IN REVIEW
recovery project.
13 UK oil company
EnQuest buys
ExxonMobil’s share in
Malaysia’s Seligi field to
own a 50-percent stake
alongside Petronas. 13 UK company
Petrofac is awarded an
17 Japan’s Tohoku engineering, procurement,
Electric Power Company construction and
signs a contract to buy 13 Petronas approves JX commissioning contract to
370,000 tonnes per year Nippon’s development develop Petronas’ Refinery
of LNG from Malaysia’s plan for the Layang field and Petrochemical
LNG 2 project for 10 in block SK10, with Integrated Development
years starting in commercial production project in Johor, valued at
April 2016. to start in Q2 2016. more than $500 million.
THE OIL & GAS YEAR | MALAYSIA 2015 The Who’s Who of the Global Energy Industry
THE YEAR IN ENERGY
2015
19 South Korea’s
25 Lundin Petroleum Samsung C&T lands a
acquires a 50-percent contract to build a
stake in block PM328 regasification facility at
offshore Peninsular the Malaysian LNG
Malaysia. terminal in Johor.
The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | MALAYSIA 2015
DIPLOMACY & POLITICS
13 Common goals
15 To the forefront
N. RAJENDRAN
Deputy CEO
MALAYSIAN INVESTMENT DEVELOPMENT AUTHORITY
17 Close co-operation
Vanu Gopala MENON
Singapore High Commissioner to Malaysia
ARTICLE
FIGURES
IN
In 2015, Malaysia is working to move forward increase in diesel. Cuts have reduced the share of 13
with the planned ASEAN common market. The subsidy spending in government expenditures from
ASEAN
ARTICLE
project aims to secure the free movement of goods a peak of more than 20 percent in 2011 and 2012 to
and services in the region. ASEAN comprises 10 17 percent in the first half of 2014. ECONOMIES
countries, which together make up a marketplace Moody’s evaluated the subsidy decreases as a
worth $2.4 trillion, the seventh-largest in the world. positive development. However, the ratings agency WERE WORTH
Meanwhile, the Malaysian government is ad- added that more reforms might be needed for the A COMBINED
justing its own economic agenda in response to country to reach a balanced budget by 2020.
lower oil prices and changes in global demand for
its staple products. The government plans to lower PRICE CRUNCH: The long-term impact of lower oil
$2.4 trillion
the country’s fiscal deficit to 3 percent of GDP in prices on Malaysia’s economy is still unclear. Malaysia IN EARLY 2015
2015, down from 3.9 percent in 2013, and eventually has a more diversified economy than most oil-pro-
reach a balanced budget by 2020. This will entail ducing countries and is marginally a net exporter
cuts in subsidies and other expenditures, as well as of crude. The country’s mining sector, including oil THE
an expansion of the tax base. extraction, was responsible for 43 percent of GOVERNMENT
Malaysia’s growth in gross fixed capital in 2012.
SUBSIDISED DEVELOPMENT: The government low- Many of the projects under the Economic Trans- AIMS TO
ered fuel subsidies in December 2014. The price of
the widely used RON 95-grade petrol is now based
formation Programme, an initiative to turn Malaysia
into a high-income economy by 2020, are in the oil
LOWER THE
on a managed float system, allowing state intervention and gas industry. Lower oil prices may make these FISCAL
to protect against outside economic shocks. In 2013, investments less attractive. Petronas also projected
the government spent about MYR29 billion ($8.72 that its contribution to government revenues would
DEFICIT TO
billion) to subsidise RON 95, diesel and LPG, up
from MYR27.9 billion ($8.39 billion) in 2012.
be 37 percent lower in 2015 if oil traded in the
range of $70 to $75 per barrel.
3 percent
The subsidy reductions equate roughly to a 9.5- A 6-percent goods and service tax will be intro- OF GDP IN 2015
percent increase in petrol prices and a 10-percent duced in April 2015 as part of wider efforts to
SUMMARY
IN
5,000 5,000 30
20 -7,500
2,500 15
0 0 0 -10,000
0
2001 2003 2005 2007 2009 2011 2013 2008 2009 2010 2011 2012 2013 2014 2015 2008 2009 2010 2011 2012 2013
14 reduce state dependence on petroleum-related in- issues, maintaining good relations is important for
come. The tax will replace other consumption taxes both Indonesia and Malaysia.
2014 SUBSIDY
ARTICLE
such as the sales and service tax, but will also cover The same is true for relations with Singapore.
REDUCTIONS a wider range of goods and services. Plans to construct a bridge on the Johor Strait to re-
place the Johor Causeway may be in the works. The
LED TO A BUDGET FOR THE FUTURE: The prices of palm oil strait marks the coastal divide between Malaysia
9.5-percent and rubber, Malaysia’s two biggest exports,
have also fallen. In response, the government
INCREASE IN has created a fund to assist rubber producers Regional priorities for Malaysia in 2015
if the price continues to fall. In December
PETROL PRICES 2014, the country’s northern states were
ravaged by the worst flooding seen since 1971,
include advancing progress on the
THE
with more than 230,000 people evacuated
from their homes. Palm oil production slumped
planned ASEAN common market and
BUMIPUTERA to a 10-year low as a result of the damage. ensuring maritime security and co-
Malaysia’s 2015 budget was unveiled in
ECONOMIC
EMPOWER-
October 2014 and amended in January 2015
to accommodate for low oil prices and the
operation in the South China Sea.
devastation from monsoon floods.
MENT The original version of the budget included and Singapore. The primary reasons cited for con-
PROGRAMME measures to improve opportunities for jobs and struction of the bridge are to ease congestion and
housing. The updated version of the budget intro- further improve bilateral relations.
IS VALUED AT duced more allocations for small and medium-sized
$10 billion enterprises to help further reduce dependence on
the oil industry and flood relief for affected businesses
GLOBAL TIES: Malaysia’s relations with the US are
also improving. Barack Obama visited Malaysia in
and rehabilitation projects. April 2014, the first visit made by a US president
A more controversial component of the budget since Lyndon B. Johnson’s in 1966.
MALAYSIA is the nearly $10-billion Bumiputera Economic Em- On the docket were talks to increase co-operation
PLACED powerment programme, which will benefit ethnic on economic issues, security, education and tech-
Malays and other indigenous people, around 68 nology, as well as the feasibility of visa-free access
18th percent of the country’s population. Critics have for work and travel for up to 90 days for Malaysians
IN THE 2015 raised concerns over the initiative’s cost and its po- visiting the US. Malaysia’s home minister has said
tential exacerbation of a “brain drain” among the that the efforts to meet US visa-free requirements
DOING Chinese and Indian-Malaysian population, who could succeed by the end of 2015.
BUSINESS may perceive themselves as being at a disadvantage.
DIPLOMATIC PUSH: Malaysia has already indicated
RANKINGS ECONOMIC CHANGE: Malaysia aims to become a it will be a strong diplomatic player in 2015. The
high-income country by 2020, and the World Bank prime minister actively promoted both the country
says it is on track to do so. “Malaysia is poised to and the ASEAN community at the World Economic
reach the World Bank’s high-income status before Forum meeting in January 2015 during talks with
2020, as the basic drivers of growth at the macro foreign leaders and representatives of UK defence
level remain firm,” World Bank senior country company BAE Systems, engineering multinational
economist for Malaysia, Frederico Gil Sander, said. Lloyd’s Register and Shell, among others.
In 2014, the country placed among the top five For the first time in 15 years, Malaysia was
economies in the Asia-Pacific region in seven areas voted back into the United Nations Security Council
measured by the World Bank’s Doing Business in- in October 2014 as a representative of the Asia-
dicators. Its overall ranking was 18th worldwide. Pacific region. While oil prices remain uncertain in
2015, the Malaysian government is working to
REGIONAL RELATIONS: As the chair of ASEAN in ensure the country and the wider ASEAN region
2015, Malaysia is in the delicate position of having will be poised for longer-term economic security.
THE OIL & GAS YEAR | MALAYSIA 2015 The Who’s Who of the Global Energy Industry
VIEWPOINT
N. RAJENDRAN
To the forefront
The Economic Transformation Programme (ETP) is meant inviting foreign investors to come to the country and set up 15
to move Malaysia from a middle-income to high-income collaborations with local companies.
VIEWPOINT
nation by 2020. Previous development plans have not suc- Incentives in the local oil and gas industry include the
ceeded in this goal. Growth maintained the same rate, but Petroleum Income Tax Act, which encourages enhanced
Malaysia was not getting any richer than its neighbours. oil recovery and deepwater projects through tax incentives,
Countries such as Singapore, Japan and Korea were at the Refinery and Petrochemical Integrated Development,
the same economic level as Malaysia in the 1960s, but we known as RAPID, to expand and diversify Petronas’ petro-
were stuck in the middle-income trap, unable to sustain chemicals operations and the Global Incentive For Trading,
the necessary growth to reach high-income status. That is to draw in global commodity trading firms.
why the government launched the ETP in 2010, seeking With the exception of strong domestic services companies
growth with a targeted investment of $444 billion by 2020. such as SapuraKencana, Bumi Armada and Dialog Group,
Malaysia has always sourced technology abroad. We need
THE ROLE OF OIL: The government realised that with larger numbers of such companies and a more intense
limited resources, developing every aspect of the economy focus on advancing the technology available in the country.
would not be possible. If we were to invest in developing 40 Malaysia has more than 3,500 companies in the hydro-
different industries, 20 of them would likely fail. carbons industry, yet we do not have a robust local services
With this in mind, the government environment or make a major contri-
selected 12 sectors (11 industries and bution to the oil and gas technology
Greater Kuala Lumpur) that it felt would
benefit most. Because the oil and gas
Malaysia has more sector globally. We need to step up the
capacity of Malaysian companies to
industry contributes more than 20 per- than 3,500 companies compete at the global level.
cent of the country’s GDP, it was iden-
tified as a key economic area and became in the hydrocarbons SURPASS SINGAPORE: Future hydro-
central to the plans. carbons consumption growth will be
To meet the goals of the ETP and industry, yet we do driven by India, China, Malaysia and
transform Malaysia into an Asia-Pacific the Association of Southeast Asian Na-
oil and gas centre by 2017, the hydro- not have a robust tions more than anywhere else in the
carbons industry must contribute 5 world. Singapore is strong in the re-
percent of annual growth to the GDP local services gional hydrocarbons industry, but we
between 2010 and 2020. This will re- believe Malaysia can take the lead.
quire the industry’s contribution to in- environment. Malaysia has both the area to accom-
crease to about $70 billion by 2020. modate an expanding industry and oil
MIDA has been facilitating this ex- and gas production, unlike Singapore.
pansion, approving 13 oil and gas projects for the first seven Major projects and investors are flourishing in the
months of 2014, with a projected investment value of almost country today. In addition to Petronas’ $17.2-billion RAPID
$5 billion. This is an increase over the more than $2 billion project, US company GE Oil & Gas has established its Mon-
of investment in the industry in 2013. itoring Diagnostics Centre in Kuala Lumpur, overseeing
around 800 gas turbines and compressors in 27 countries.
TECHNOLOGY AND SERVICES: Oil and gas production is Swedish independent company Lundin Petroleum also
becoming more difficult and conventional methods less plans to invest $385 million in its Malaysian operations.
common. Exploration is farther afield and drilling is deeper. These projects are just a few examples of the billions of
The challenges presented by higher pressures and tempera- dollars being invested in Malaysia’s hydrocarbons industry
tures, unconventional hydrocarbons developments and in both upstream and downstream projects.
brownfield projects pose many potential complications. Given its location and economic climate, Malaysia can
Malaysia must have the latest exploration techniques in become a cost-competitive place for investors to establish
order to discover new reserves, as well as access to enhanced offshore operations and manufacturing of advanced tech-
oil recovery technologies. Furthermore, these approaches nologies for regional and international markets. In the years
have to be developed through local manufacturing and by to come, Malaysia will lead Asia’s hydrocarbons industry.
The Who’s Who of the Global Energy Industry THE OIL & GAS YEAR | MALAYSIA 2015