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||647.0||675.0||663.8||647.3||642.7||643.4||641.4|
|Refined products production, 000b/d||545.7||534.8||535.8||455.5||409.9||410.7||410.7|
|Refined products consumption & ethanol, 000b/d||623.3||635.8||648.5||661.5||674.8||688.3||698.6|
|Dry natural gas production, bcm||64.4||64.9||63.0||61.7||62.6||63.4||64.1|
|Dry natural gas consumption, bcm||31.6||32.2||32.8||33.2||33.5||34.5||35.4|
Latest Updates and Key Forecasts
In October 2015, Sweden-based Lundin Petroleum's subsidiary Lundin Malaysia has made a gas discovery at the Mengkuang-1 exploration well in licence PM307 offshore Malaysia.
In September 2015, Malaysian oil and gas firm Tanjung Offshore and China-based Yantai Jereh Oilfield Services Group have signed a partnership deal, seeking to work together in the Malaysian oil and gas exploration sector.
We retain our view that low oil price environment will weaken the incentives to raise production from existing fields to full capacity 2016. The rising cost of projects in Malaysia, as project types increasingly move towards more difficult developments such as deepwater and enhanced oil recovery (EOR), will also see investment into longer-term projects hit by subdued oil prices.
Short-term gas production will be hit by a loose LNG market. 2015 gas production is estimated at 63.0bcm, which is 3% lower than in 2014. We keep our view that lower oil prices will continue to push lower gas production until 2017. We hold a more positive longer-term outlook as a number of recent discoveries and major projects will boost the country's gas output volumes to 71.1bcm by 2024.
We believe that Malaysia's refining sector will undergo consolidation over the coming few years. This will push down the refining capacity from 588,000b/d in 2015 to 412,000b/d in 2017. The refining capacity is expected to receive a boost from the new Petronas' 300,000b/d RAPID petrochemicals facility, which is set for completion in the second half of 2019. This will raise the country's refining capacity to 712,000b/d.
We forecast both refined products consumption and gas demand growth to average 1.7% per annum between 2015 and 2024. Malaysia's refined products consumption will increase from 648,170b/d in 2015 to 752,120b/d in 2024, while domestic gas demand will rise from 32.9bcm to 38.1bcm over the same period.
Malaysia's oil trade will be largely shaped by the ongoing changes in the country's refining sector. Crude oil exports will see a sharp increase as Malaysia's downstream sector consolidates over the coming few years. However, the completion of the new Petronas RAPID refinery in 2020 will boost the domestic demand and push downwards the crude exports until 2024.
This quarter we have kept our forecast for Malaysia's gas trade. We believe the net exports will decline from 30.1bcm in 2015 to 28.3bcm in 2020 on account of rising domestic consumption and highly competitive LNG environment in Asia. We see gas exports rebounding to 33.0bcm by 2024 due to increased regional demand.
The Malaysia Oil & Gas Report has been researched at source and features BMI Research's independent forecasts for Malaysia including major indicators for oil, gas and LNG, covering all major indicators including reserves, production, consumption, refining capacity, prices, export volumes and values. The report includes full analysis of industry trends and prospects, national and multinational companies and changes in the regulatory environment.
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