BMI View: Malaysia's long-term crude oil production will be hit as investment in deepwater exploration and production is curtailed amid low oil prices. A more competitive Asian LNG market will reduce foreign gas demand in the short term.
|e/f = BMI estimate/forecast. Source: BMI, EIA, national sources|
|Crude, NGPL & other liquids prod, 000b/d||675.0||645.9||618.6||592.7||567.9||549.2||529.0|
|Dry natural gas production, bcm||64.9||63.0||61.7||62.6||63.4||64.1||64.7|
|Dry natural gas consumption, bcm||32.6||33.2||33.5||33.9||34.9||35.8||36.8|
|Refined products production, 000b/d||534.8||529.4||524.1||529.4||534.7||540.0||702.0|
|Refined products consumption & ethanol, 000b/d||635.8||661.2||681.1||711.7||739.5||766.9||795.3|
Latest Updates and Key Forecasts
We forecast Malaysia's crude oil production to remain on a downtrend over 2016 to 2025 as weak oil prices limit the attractiveness of boosting output. Furthermore, we do not expect new final investment decisions in deepwater and marginal projects in the next several years given their high breakeven cost.
We have further downgraded our oil production forecast this quarter on the back of continuously low oil prices, our downwards oil price forecast revision for the coming years and Petronas' large spending cuts for the coming four years. We see Malaysia's oil production levels declining from an estimated 645,900b/d in 2015 to 458,600b/d in 2025
We have upgraded our refining forecast this quarter based on the selling of Shell's Port Dickson refinery to Chinese private refiner Shandong Hengyuan Petrocheminal. The new buyer has announced plans to upgrade the refinery to meet new Euro IV and V fuel specifications. We are therefore now including this refinery within the entire forecast period.
We expect refined fuels production to remain relatively stable over the coming years, rising in 2020 with the start of the RAPID refinery, boosting refined products production from 410,700b/d in 2019 to 593,200b/d by 2022.
Malaysia's oil consumption will grow at a slower rate over the next decade as a result of weakening economic growth and falling energy intensity weighing on demand. The consumption mix will remain dominated by diesel and gasoline over our forecast period.
With the fall in crude oil production and the coming online of the RAPID oil refinery in 2020, we expect Malaysia will become a net crude oil importer by 2020. The country will remain a net importer of refined products throughout our forecast period, despite a decrease in import requirements in our forecast this quarter due to our revision in refining capacity.
Weaker LNG export prices are resulting in a dip in Malaysia's gas production, which we expect will continue into 2016. From 2017 onwards, the start-up of projects currently in the pipeline will see a resumption in the uptrend in Malaysia's gas output.
Malaysia's LNG exports will stagnate over the first half of our forecast period due to a well-supplied global market, before recovering towards the latter part of our 10-year forecast on the back of growing demand in Asia.
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