The document provides an overview of the Malaysian oil and gas market. It notes that Malaysia is the 2nd largest oil producer in ASEAN and 16th largest natural gas reserves globally. The oil and gas sector contributes 14.5% to Malaysia's GDP. The upstream sector includes over 400 production fields. The mid and downstream sector is developing new integrated petroleum complexes. Future opportunities exist in deepwater exploration, developing high contaminant gas resources, and maintaining investment in exploration.

1. WWW.BUSINESSFRANCE.FR
OIL & GAS
MARKET OVERVIEW
August 2018
Laetitia Boura
Senior Trade Advisor Industries, Energy & CleanTech
Business France Malaysia
MALAYSIAN
O&G MARKET

2. CONTENT
1. GENERAL OVERVIEW
2. UPSTREAM
3. GLOBAL EXPLORATION TREND
4. MID & DOWNSTREAM
5. ECOSYSTEM
6. CONCLUSION

3. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
GENERAL OVERVIEW
3
KEY FIGURES (2017)
▪ 2nd producer in ASEAN and 26th rank of world proved reserves of crude oil (681 000 bbl/d –).
▪ 16th rank of world natural gas reserves.
▪ 28 billions of BOE (Baril Oil Eq): 70% Gas / 30% Oil
▪ 3rd global LNG exporter (after Qatar)
DRIVERS OF GROWTH
▪ 14.5% of the GDP (2016)
▪ 14.7% to the Government’s revenue (2016)
Source: https://www.researchgate.net/publication/321360712

4. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
UPSTREAM
4
OPERATIONS:
▪ More than 400 O&G fields in operation
▪ Exploration Opportunity in 2016: 9 focus blocks
▪ 101 Productions Sharing Contracts (PSCs) and 6 Risk Sharing Contracts

5. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
GLOBAL EXPLORATION TRENDS
5
▪ Challenges
▪ Fall in oil price – budget cost – inflated cost environment
▪ Monetization difficulties for gas
▪ Higher volumes in giant fields, longer lead time
▪ Return to positive value creation and reduce discovery cost to 1.3$/boe
▪ Declining volumes
▪ Total discovered volumes decrease 38Bboe (2010-2012) to 12 Bboe (2017) but size of average discovery
constant (77Mboe)
▪ Industry response
▪ Slashing budgets, headcount, exiting conventional exploration
▪ Dramatic fall of investment from 90B$ in 2014 to 35B$ in 2017 (record level)
▪ More resilient, smarter portfolio, do more with less capital
▪ Shift from exploration to DRO

6. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
GLOBAL EXPLORATION TRENDS
6
▪ Discovery size
• 2010-2012 – Mainly high risk exploration
• 2015-2017 – More low risk exploration
➢ FOCUS ON NEAR-FIELD AND ONSHORE
▪ Return to volumes
➢ RESULT OF HIGH GRADING AND PRIORITIZATION IN A RESTRICTED
BUDGET ENVIRONMENT
➢ DEEPWATER DISCOVERIES MAKE 50% OF DISCOVERIES

7. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
MID & DOWNSTREAM
7
CURRENT SITUATION: MALAYSIA A INTERNATIONAL TRADING HUB
▪ 6 refineries with the total refining capacity of around 900,000 bbl/d.
▪ Costs reduce resulted in the relocation of sizable players as McDermott and Subsea 7.
PENGERANG INTEGRATED PETROLEUM COMPLEX (PIPC)
▪ Pengerang Independent Deepwater Petroleum Terminal (PIDPT)
▪ Pengerang Integrated Complex (PIC)
▪ Refinery and Petrochemical Integrated Development (RAPID)

8. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
ECOSYSTEM
8
▪ After the Trans Pacific Partnership Agreement, PETRONAS will retain its regulatory and licensing role.
▪ PETRONAS growth and stature has been matched by a maturing local industry with over 4,000 oil & gas
businesses including International Oil Companies.

9. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
ECOSYSTEM – PETRONAS & PETROS ?
9
▪ PDA 1974 – Creation of PETRONAS: Sole ownership and control of all upstream oil and gas resources
▪ June 2018
- Federal Court refuses PETRONAS case (requesting affirmation of PDA1974 having a federal implication, including
Sarawak)
- Based on MA 1963 - Sarawak reclaiming their “constitutional authority to regulate the mining and production of
O&G as well as the distribution of Gas”.
- Referral to High court
▪ 1 July 2018
- Creation of PETROS – Sarawak’s own oil & gas company comes into force
 Regulatory challenge at Sarawak ?

10. Open
Sarawak
Domestic demand expected to grow; State is giving
focus to grow the petrochemical industry robustly as early as
2019/2020
Undersupplied in meeting current demand; PETRONAS
working hard to mitigate the shortfall in order to meet MLNG
plant demand
Remains a challenge to develop future field; amid the
low oil prices and competition among LNG suppliers, developing
the discovered gas fields at competitive cost and maintaining
supply reliability is critical
Technology is the key; to unlock value from the high
contaminant discovered resources
Maintaining a consistent investment flow in
exploration; to ensure sustainable resources to support the
future demand
Opportunities Right Ahead
SK 2P+2C
Resource as at
1.1.2018
Long Term Sarawak Gas Supply-Demand
0
1 000
2 000
3 000
4 000
5 000
6 000
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Producing SSGP supply
Sanctioned Future Project
Non LNG Demand LNG Plant Requirement
2
1
LNG
Power, Petrochemical,
Industries, Reticulation
Unit: MMscf/d
11%
15%
19%
19%
7%
10%
13%
Producing
Producing
CO2 10%
Sanctioned
Producing
High H2S
Producing
High CO2
Sanctioned
CO2 >10%
Unsanctioned
High H2S
Unsanctioned
CO2 >40%
Unsanctioned
High H2S High CO2
Unsanctioned
CO2 20-40%
Unsanctioned
Sanctioned
High H2S High CO2
Source: TOTAL Malaysia

11. Sabah
Development of new pipeline infrastructure opens
up a new demand opportunities; The Trans Sabah Gas
Pipeline (TSGP) is expected to open up new demand center at
the Sabah east coast region by 2020/2021
Challenge to develop future field; especially to unlock
the discovered resources at deepwater, stranded and marginal
Liberalizing the domestic gas remains a challenge;
as the cost of developing the future field increases, much efforts
need to be undertaken to relook at the domestic gas price
Maintaining a consistent investment flow in
exploration; to ensure sustainable resources to support the
future demand
Open
Growing the Gas Demand and Unlocking Deepwater Potentials
SB 2P+2C
Resource as at
1.1.2018 60%
40%
Shallow
Water
Deep
Water
water depth <200 m
water depth >200 m
0
500
1000
1500
2000
2500
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
2038
2039
2040
Producing GCBD
Opportunity Power Sector
Non-Power Sector LNGs (export)
Additional Sipitang TSGP (Non Power)
Long Term Sabah Gas Supply-Demand
Unit: MMscf/d
3
2
1
MLNG & FLNGs
Power Sector (incl
Sandakan Power)
Non-Power Sector
TSGP (Non Power)
Additional Sipitang
*Opportunity refers to discovered resources
Source: TOTAL Malaysia

12. OIL & GAS GENERAL OVERVIEW – AUGUST 2018
© 2018 – BUSINESS FRANCE
MALAYSIAN O&G MARKET
CONCLUSION
MARKET PERSPECTIVES:
▪ Development of oil infrastructures, recycling, and dismantling services
▪ Know-how and technology with strong added value for exploration
(geology, geophysics, imaging, etc.)
▪ Drilling in deep sea, collect and treatment of gas
▪ EOR and marginal fields, capture of the CO2, etc.
▪ Challenge remains to develop Future Projects; Developing high contaminant gas resources at competitive cost
through technology solutions remains critical decision in order to provide competitive gas supply
GENERAL RECOMMENDATIONS
▪ Capacity of innovation (high technology in drilling, engineering of reservoirs, submarine engineering, design and
maintenance, equipment and high-technology applications)
▪ Find local partners referenced with Petronas
▪ Remain attentive to the evolutions of the conditions of eligibility for Sarawak
▪ attractive tax system and global incentive allowance (GIFT, Global Incentive For Trading) managed by the
MIDA. Agency which support investment in O&G,
▪ Maintaining consistent investment flow in exploration; to ensure sustainable resources to support the future
demand

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BUSINESS FRANCE MALAYSIA
French Trade Commission / Kuala Lumpur Office
EMBASSY OF FRANCE IN MALAYSIA
Laetitia Boura
Senior Trade Advisor
laetitia.boura@businessfrance.fr
Shahreza SHAHRIR
Trade Advisor
shahreza.shahrir@businessfrance.fr
Charles MVOGO
Trade Advisor
charles.mvogo@businessfrance.fr
INDUSTRIES, ENERGY & CLEANTECH