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Malaysia – Oil & Gas

Malaysia has a vibrant oil and gas industry. The national oil company, Petronas is ranked the 69th biggest company in the world in the Fortune 500 list in 2014, with a revenue of over US100.7 billion and total assets of over US$169 billion.

 Malaysia holds proven oil reserves of 4 billion barrels as of January 2014, the fourth-highest reserves in Asia-Pacific after China, India, and Vietnam. Nearly all of Malaysia's oil comes from offshore fields. The continental shelf is divided into three producing basins: the basin offshore Eastern Peninsular Malaysia in the west and the Sarawak and Sabah basins in the east. Most of the country's oil reserves are located in the Peninsular basin and tend to be light and sweet crude. Malaysia's benchmark crude oil, Tapis Blend, is a light and sweet crude oil, with an API gravity of 42.7° and a sulphur content of 0.04% by weight.

Malaysia also holds 83 trillion cubic feet (Tcf) of proven natural gas reserves as of January 2014, and was the third-largest natural gas reserve holder in the Asia-Pacific region after China and Indonesia More than half of the country's natural gas reserves are located in its eastern areas, predominantly offshore Sarawak. Most of Malaysia's gas reserves are associated with oil basins, although Sarawak and Sabah have an increasing amount of non-associated gas reserves that have offset some of the declines from mature oil and gas basins offshore Peninsular Malaysia.

There are over 3,500 oil and gas (O&G) businesses in Malaysia comprising international oil companies, independents, services and manufacturig companies that support the needs of the O&G value chain both domestically and regionally. Many major global machinery & equipment (M&E) manufacturers have set up bases in Malaysia to complement home-grown M&E companies, while other Malaysian oil and gas companies are focused on key strategic segments such as marine, drilling, engineering, fabrication, offshore installation and operations and maintenance (O&M).

Petronas provides around 30% of the Malaysian government's revenue, although the government has been actively cutting down on its reliance of petroleum, with a target of 20%.

Petronas is also the custodian of oil and gas reserves for Malaysia. Hence, all oil and gas activities are regulated by Petronas. Malaysia encourages foreign oil company participation through production sharing contracts, in which significant amount of oil will be given away to the foreign oil company until it reaches a production milestone. Currently, many major oil companies such as ExxonMobil, Royal Dutch Shell, Nippon Oil, and Murphy Oil are involved in such contracts.  As a result, 40% of oil fields in Malaysia are developed.

 Oil & Gas Infrastructure :-

Oil Refineries

Malaysia has five oil refineries, providing a combined capacity of about 578,913 barrels per day (b/d), and a gas-to-liquids plant with a capacity of 14,700b/d. Three of the refineries are operated by Petronas (Melaka I and II and Kertih), one by Shell's Malaysian unit and one by Petron. Petronas' RAPID project paves the way for an expansion of the country's refining capacity, though this expansion could be offset by Shell's sale or conversion of its Port Dickson refinery.

Existing Refineries

Melaka (PSR-1) :-  PSR-1 is based in Melaka and is owned by Petronas' subsidiary Petronas Penapisan (Melaka) Sdn Bhd. It has a refining capacity of 100,000b/d and processes sweet crude and condensates. It came into operation in 1994.

Melaka II (PSR-2) :- The Melaka II refinery, located on the same site as the Melaka I facility, is owned by the Malaysia Refining Company. It is operated by Petronas Penapisan. Melaka II is currently Malaysia's largest refinery, which, following expansion works in 2010, raised the plant's capacity by 45,000b/d. It now has a capacity of 170,213b/d. PSR-2 processes medium, high sulphur crude that is mostly sourced from the Middle East.

Petron Port Dickson :- One of two refineries in Port Dickson, Negeri Sembilan, the 88,000b/d refinery was established in 1963. San Miguel's Petron acquired the refinery from ExxonMobil in August 2011. The refinery processes mainly light and sweet crudes and its product slate includes gasoline, jet fuel, diesel, liquefied petroleum gas and low-sulphur residual fuel oil. Unlike other foreign investors in Malaysia's refining segment who are winding down their interests, Petron is looking to upgrade its Port Dickson facility and network expansion at a cost of about USD1bn.

Shell Port Dickson :- Shell's Port Dickson refinery is the bigger of the two in the area with a licensed production capacity of 156,000b/d. Most of its output is consumed within Malaysia. It was also established in 1963. Its product slate includes gasoline, jet fuel, diesel, sulphur, liquefied petroleum gas and propylene.

Kertih :- Kertih is operated by Petronas Penapisan and is based in the northern state of Terengganu. It has a refining capacity of about 49,000b/d and mainly uses local light, sweet crude for feedstock. The refinery is part of a wider integrated petrochemical complex in the Petronas Petroleum Industry Complex.

Bintulu Gas-to-Liquids (GTL) :- Shell's Bintulu GTL plant - also known as Shell Middle Distillate Synthesis (SMDS) plant - is its first in the world. Based in Bintulu, Sarawak, the plant is located near gas fields and converts gas into synthetic petroleum products. The GTL plant opened in 1993 when and is capable of converting 3.92mn cubic metres per day of gas into 14,700b/d of transport fuels and products such as naphtha, kerosene, detergent feedstock and waxes. Bintulu GTL is a JV between Shell, Mitsubishi, Petronas and the state government of Sarawak. In 2011, a company representative revealed that the plant was to expand its output to 29,400b/d - a doubling of its original capacity of 14,700b/d.
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