Reserves shrinking, Malaysia turns to marginal oilfields

A deep-sea platform is seen in Brazilian waters. Malaysia is also

venturing into deeper and deeper waters in search of more oil.

Malaysia is expected to award at least four to five licences to develop smaller fields next year as it looks to halt a decline in crude oil and natural gas production, a senior government official said.

The government has been developing deep-water fields, rejuvenating old areas and introducing incentives to develop so-called marginal fields once deemed less profitable to explore in a bid to increase output as global energy use climbs.

It awarded licences to develop two marginal fields this year, and will double that number in 2012.

“Our production is declining so we want to find more oil to maintain that production level,” Mohd Emir Mavani, a director in charge of the energy industry at the government’s Performance Management and Delivery Unit, told Reuters in an interview late yesterday.

“What we want to do is maintain our production at 650,000 barrels per day.”

Crude oil output in Southeast Asia’s second-biggest oil and gas producer is seen rising 3.3 per cent next year, reversing a decline in 2011, the government forecast in its economic report in October.

Oil production is expected to recover to 620,000 bpd, after an estimated six per cent drop this year to 600,000 bpd, extending a 3.1 per cent decline in 2010, according to the estimate.

Mohd Emir said the marginal fields would be developed by joint-ventures between foreign and Malaysian companies on a risk-sharing basis.

The smaller fields typically produce about 30,000 barrels per day, he said.

Marginal oil fields “will grow, not only in Malaysia”, he said. “We also have Vietnam and Indonesia who equally have this kind of opportunity.”

In August, Malaysian state oil firm Petroliam Nasional awarded the Balai Cluster marginal oil field offshore Sarawak to a venture involving Dialog Group, Australia’s ROC Oil Co and Petronas’s exploration arm .

It was the second marginal field awarded by Petronas this year after a group comprising Kencana Petroleum, SapuraCrest Petroleum and Petrofac won the Berantai marginal field in January.

Mohd Emir is also chief executive of Malaysia Petroleum Resources Corp, which is tasked with developing the energy services sector.

The organisation aims to attract RM450 million of investments in the oil and gas services industry next year, after beating its goal of drawing RM320 million of investments this year.

Vitol was among the companies that pledged investments in Malaysia, Mohd Emir said.