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Petronas to invest $61 billion in Malaysia on next five years

Petronas to decide soon on Bintulu LNG Expansion

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolAs part of Malaysia oil and gas and petrochemical strategic development program, the national oil company Petronas is to about to decided on the ninth liquefied natural gas (LNG) train project in its Bintulu LNG facility in the Sarawak Province, Malaysia.

On January 4th 2013, Petronas announced in its strategic plan that it is planning to spend up to $61 billion capital expenditure over the next five years in the oil and gas and petrochemical sector.

Commented by the Malaysian RHB Research Institute, this huge amount of investments results from a double challenge for Petronas.

Malaysia expects its national oil company to increase the oil and gas production capacities in order to meet the booming local consumption while compensating the depletion of maturing fields.

Petronas_Bintulu_LNG_ExpansionIn addition Malaysia is modifying its economical model in order to keep at home the largest portion of the hydrocarbon value chain.

In practice it means that instead of exporting crude oil and natural gas as today, Malaysia will invest downstream in refineries and petrochemical sector to supply its own market with intermediates instead of importing them to supply its nascent manufacturing industry.

In 2012, Petronas succeeded to stop the production to continue declining and managed to reach 3% increase over 2011 with 1.99 million barrel oil equivalent (boe) per day but it is still lagging behind the best Petronas record year of 2.038 million boe/d in 2008.

These figures exclude the production in South Sudan interrupted by tensions and taxes calculation with Sudan to export crossing oil and gas production

In 2013, Petronas expects the South Sudan production and export to come back to normal.

In actual circumstances, Malaysia will become importer of LNG in 2013 through its new regasification LNG terminal to start commercial operations on second half of the year.

From then, Malaysia may become net importer of natural gas depending how Petronas will manage to ramp up local production. 

Therefore most of the $61 billion capital expenditure will be concentrated on exploration and fields development projects.

In addition to explore and appraise new prospects, Petronas will deploy enhanced oil recovery (EOR) techniques to revive old oil and gas fields and increase production or expand plateau production from maturing fields.

Implementing the subsea technologies, Petronas will also develop marginal oil fields and tie them in existing infrastructures.

In 2012, Petronas declared 21 new discoveries including Bidara, Gambir RDR, Kasawari, Kurma Manis-1, Berangan-1, Tembakau-1, Kluang North-2 and Tukau Timur Deep-1 representing multi-trillion cubic feet recoverable reserves of natural gas.

All these investments in new projects to increase crude oil production are based on a conservative $80 per barrel in long run.

Since Malaysia expects these projects to contribute to the national production on the next five years, Petronas shall proceed with investment decisions from 2013.

In this context, the addition a ninth LNG train in Bintulu appears as a prerequisite for Petronas to absorb future natural gas production.

JGC leading Petronas Bintulu LNG trains expansion

In 2011, Petronas decided to add a ninth LNG train to its existing Bintulu LNG complex.

In January 2012, Petronas established a new company, Petronas LNG 9Sdn Bhd, to support the project.

In February 2012, Petronas signed competitive front end engineering and design (FEED) contracts with two contenders:

 – JGC

 – Saipem with Chiyoda

This Bintulu 9 LNG train should have a capacity of 3.6 million t/y of LNG and should costs between $1.5 and $2 billion capitalexpenditure.

Petronas Bintulu 9 LNG train project should include:

Petronas_JGC_Bintulu_9_LNG_Project – Gas receiving facilities

 – Acid gas removal

 – Gas dehydration unit

 – Mercury removal unit

 – Fractionation unit

 – Liquifaction unit

For storage and export, the 9 LNG train project will use the existing facilities in Bintulu.

JGC and SaipemChiyoda completed their competitive FEED in December 2012, so that Petronas could evaluate their conclusion since then.

At the end of March or on early April, Petronas should select the winner of the competitive FEED, make the final investments decision and convert the actual FEED contract into engineering, procurement, construction and commissioning (EPCC) contract.

As JGC was the EPCC contractor of the previous eight LNG train in Bintulu, and since Japan is the primary customer of the exported LNG, it appears as in the lead for the ninth Bintulu LNG train to come on stream at the end of 2015.

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