KUALA LUMPUR: Malaysia's deepwater explorations are expected to accelerate as more investments are directed towards underexplored areas, according to BMI research.
It said in its note that recent deepwater oil and gas discoveries present significant potential benefits for oil and gas production.
In 2022, TotalEnergies made an oil and gas discovery at the Tepat-2 well in Block N within Sabah's emerging ultra-deepwater Trough province, complementing the company's earlier discovery of Tepat-1 in 2018.
Off the coast of Peninsular Malaysia, Hess discovered a new gas reservoir at the Bergading Deep-4 well in Block PM302 within the North Malay Basin.
In the Northwest Sabah Basin, three discoveries - Layang-Layang-1 by Petronas, as well as Hikmat-1 and Dermawan-1 by PTTEP - confirmed a viable petroleum system, unveiling new opportunities in the ultra-deepwater and deepwater regions.
"These discoveries provide incentives for investors to ramp up explorations and raise capital expenditures. Despite cost-related challenges, an increase in deepwater drilling is expected in 2024 and beyond, with a primary focus on natural gas for liquefied natural gas (LNG) production," BMI said in its note.
Deepwater exploration has gained pace since 2021 due to Malaysia's increased focus on tapping into previously unexplored reserves in deepwater regions as part of its long-term objective to meet oil and gas production targets.
From 2021 to 2023, over ten deepwater blocks were offered through Malaysia's petroleum bidding rounds (MBR), with seven blocks awarded to consortia of foreign and local companies.
According to Malaysia Petroleum Management (MPM), since 1974, only 116 deepwater exploration wells have been drilled off Malaysia's coast, constituting less than 10 per cent of the total wells drilled in the country.
BMI said there are considerable opportunities to intensify drilling activities as a result of licensing commitments made in recent production sharing contracts (PSCs).