Key Facts for the Oil, Gas & Energy Industry in Sabah

• Sabah has about 11 trillion cubic feet (tcf) of gas and 1.5 billion barrels of oil in its reserves, representing about 12% and 25% of Malaysia’s gas and oil reserves. (FACTS Global Energy)

• Latest discovery of oil offshore of Sabah, initial estimates put the well’s reserves at 227 million barrels of oil equivalent. (Nov 2011 Reuters)

• The Sabah-Sarawak Pipeline and the Sabah Oil & Gas Terminal are major investments in the region to exploit the hydrocarbon reserves in Sabah. (Frost & Sullivan Asia Pacific)

• The RM4.6bil Sabah Ammonia-Urea (Samur) plant project in Sipitang, will create at least 400 jobs for locals once fully operational (The Star Online)

• Still banking on Oil and Gas -  The oil and gas industry in Sabah continues to be a significant contributor to the state’s economic growth, although fuel prices dropped several years ago following the global downturn. Chief Minister Datuk Seri Musa Aman said the State Government is committed and has formulated a long term plan to keep developing the industry.  In the long run, the oil and gas sector will become one of the main contributors to Sabah’s growth. (Daily Express, 9th August 2016)

• Sabah Shell Petroleum Company Ltd (SSPC) has taken a final investment decision (FID) on Phase 4 of the Gumusut-Kakap-Geronggong-Jagus East (GKGJE) deepwater offshore development project, with its co-venturers. Along with partners ConocoPhillips Sabah, Petronas Carigali, PTTEP Sabah Oil Limited, Pertamina Malaysia Eksplorasi Produksi and others, Shell has declared a final investment decision (FIP) for GKGJE 4, with start-up scheduled for 2024. The deepwater offshore development will consist of the drilling of four wells which will be tied back to the Gumusut-Kakap (GK) semi-submerisble floating production system (FPS), a unit already operated by SSPC off the coast of Sabah. (www.shell.com.my, 3 October 2022)

• A RM1 billion Sabah Maju Jaya Renewable Energy Industrial Complex (SMJREIC) will be built on a 25-acre land at the Sepanggar Bay Container Port. (MIDA, 14 Feb 2022)

• Malaysia’s Dewan Rakyat (House of Representatives) passed two bills on proposed amendments to the Renewable Energy Act 2011 and the Sustainable Energy Development Authority Act 2011 on 3 October 2022 in preparation for the reassignment of autonomous power in the supply of electricity to the Sabah state government. The Sabah State Government will set up its own Sabah Energy Commission so that the electricity supply regulatory authority can be transferred from the Federal Government to Sabah.(Bernama, 3 Oct 2022)

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Why Sabah?

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According to the Oil & Gas Journal (OGJ), Malaysia held proved oil reserves of 3.6 billion barrels as of January 2017, the fourth-highest reserves in Asia-Pacific.

 

With major oil and gas deposits offshore, Sabah has long been a key part of Malaysia’s hydrocarbons industry – a major driver of the national economy where oil and gas have made up a considerable slice of Sabah’s state revenues. Sabah is still proving lucrative, with discoveries continuing up to recent times.

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Oil and Gas in Sabah

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Sabah is Malaysia's top crude oil producer in Malaysia (Malaysia Energy Commission, 2016). The oil, gas and energy sector has been one of the important contributors in Sabah’s economic growth with the industry recording more than 20 per cent share of the state’s Gross Domestic Product.  (Borneo Post, July 2018)

 

Sipitang Oil & Gas Industrial Park (SOGIP) is a wholly-owned state corporation, tasked to spearhead the development of oil and gas industries in Sabah. Located in Sipitang, this region is the center for Oil and Gas activities along the west coast of Sabah.

 

Sabah Oil and Gas Terminal (SOGT) is a terminal located in Kimanis, Sabah of Malaysia. The terminal handles the production of oil and gas from the West Coast Field facing the western coast of Sabah, which covers the operations of Sabah Gas Terminal, Labuan Crude Oil Terminal and the Labuan Gas Terminal. SOGT covers an area of about 250 acres, with a capacity to handle up to 300,000 barrels of crude oil per day, condensate (77,000 b/pd) and natural gas (1,250 mmsfcd). (SOGIP, 2018)

 

Petronas Carigali is highly active in the Sabah’s oil and gas sector, having exclusive rights to hydrocarbons Malaysia, while also operating a series of production-sharing contracts with international majors. Shell, Murphy Oil and ConocoPhilips are some of the largest operating in Sabah.

 

Several major projects are in the deepwater area offshore the Sabah state that could bolster Malaysia’s oil production over the next decade:

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• The Kikeh oil field, operated by Murphy Oil in partnership with Petronas, was Malaysia's first deepwater oil-producing field. The Kikeh field came online in 2007 with peak production potential at 120,000 b/d. (although, estimated production in 2015 was only 15,000 b/d).

 

• The Siakap North-Petai field is a satellite field commissioned in 2014 to tie back to the Kakap field. It has a peak production rate of 35,000 b/d.

 

• The Gumusut-Kakap project, utilizing Shell Smart Fields technology uses the region's first deepwater floating production system. Project shareholders are Shell (33%), ConocoPhillips (33%), Petronas (20%), and Murphy Oil (14%). Oil is transported to the Sabah Oil and Gas Terminal onshore at Kimanis, Malaysia via a 200 km-long pipeline. At peak production, this project will contribute up to 25% of Malaysia’s oil output

 

• The Malikai oil and gas field is located offshore northwestern Sabah and has a peak production capacity of 60,000 b/d.

 

• The state of Sabah also holds reserves that are already under production or are scheduled to come online by 2020. A consortium consisting of Petronas (40%), ConocoPhillips (30%), and Shell, the operator, (30%), are developing three contiguous natural gas and condensate fields, including Kebabangan, Kamunsu East, and Kamunsu East Upthrown Canyon (KBB Cluster). The KBB floating platform has a design capacity of 300 Bcf/y for natural gas, 80,000 b/d for crude oil, and 22,000 b/d for condensate.

 

• Other upstream developments offshore Sabah include the Kinabalu Non-Associated Gas project and the Rotan field in Block H. These fields are located far offshore from existing infrastructure on the coast of Sabah and are slated to supply Malaysia’s second floating liquefaction terminal by 2020.

 

• Petroliam Nasional Bhd (Petronas) has relocated its floating liquefied natural gas (FLNG) facility, PFLNG Satu, from the Kumang cluster field, offshore Sarawak to the Kebabangan cluster field, offshore Sabah. Designed to last up to 20 years without dry-docking, the 365-metre long PFLNG Satu is expected to be able to produce 1.2 million tonnes of LNG per year.

 

• Sabah Energy Corporation Sdn Bhd (SEC), which is wholly owned by the state government, reached a milestone in 2019 with the official launch of its micro liquefied natural gas (LNG) facilities at the Kota Kinabalu Industrial Park (Malay Mail, March 2019).

• PTT Exploration and Production Public Company Limited (PTTEP), through its wholly-owned subsidiary PTTEP HK Offshore Limited (Malaysia Branch) or PTTEP HKO (who acquired Murphy Oil business in July 2019) announced a successful gas discovery from the first exploration well, Dokong-1 in Block SK417, off the coast of Sarawak, offshore Malaysia.

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(Sources: US Energy Information Association, April 2017; Shell; Petronas; Malay Mail, March 2019, PTTEP News & Media, February 2021, Bangkok )

  

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Sabah has been investing for some time in its higher-value-added, downstream sector. Indeed, investments in a string of onshore petrochemical, and oil and gas centres, such as the Sabah Oil and Gas Terminal (SOGT) at Kimanis, and the Sipatang Oil and Gas Industrial Park (SOGIP), are positioning the state well to act as a future regional hub.

 

Located in Sipitang Oil & Gas Industrial Park, Sabah, the world-class SAMUR project consists of an ammonia, urea and granulation plant, as well as utilities and jetty facilities. It forms an integral part of PETRONAS’ overall downstream plans to optimise the value of the oil and gas resources found in offshore Sabah.

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Opportunities & Growth
 

• There is a call for Sabah to design well-equipped strategies to face many future challenges in sustaining oil and gas production, expanding the value of downstream production and services, and diversifying sustainable energy, says Deputy Chief Minister and State Trade and Industries Minister Datuk Wilfred Madius Tangau. (Borneo Post, July 2018)

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• Sabah needs to be aggressive in developing downstream activities that could create more jobs for the people in Sabah. (Borneo Post, July 2018)

 

• Sabah needs foreign investment to diversify and strengthen its economy as well as to create highly skilled jobs along with new business opportunities for fellow Sabahans.

 

• Sabah Chief Minister Mohd Shafie Apdal said Sabah had a lot of resources that could be utilised for industrial development, including oil and gas, palm oil and timber, as well as tourism that could contribute to the state’s economic growth (Bernama, March 2019).

 

• Sabah has attracted additional approved investments of at least RM140.9 million in 2018 including petroleum products such as petrochemicals and non-metallic mineral products (The Borneo Post, Dec 2018).

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• The Sipitang Oil and Gas Industrial Park (SOGIP) is to be developed into its full potential as a premier petrochemical gas and petroleum downstream activity hub in this region urged Chief Minister Datuk Seri Hajiji Noor, aside from creating high quality jobs for the people (News Straitrs Times, March 8th, 2021)

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• RM15billion proposed investment projects approved in SOGIP will create spill over for the local businesses as well as creating thousands of employment opportunities for the people of Sabah and that in line with the Hala Tuju Sabah Maju Jaya development plan, the State Government was committed to develop the downstream industry by focusing more investments on existing resources including oil and gas and optimising existing industrial parks like SOGIP. (Warta Oriental, November 9, 2021)

 

The Malaysian government has also been keen to stress the need for the state’s budding petrochemicals industry to further diversify its product range and also leverage Sabah’s strategic location to attract more oil and gas traders. Due to its location on the South China Sea, near several major shipping lanes, and with a growing domestic oil and gas industry, Sabah is well placed to take a greater share of regional trade in the years to come.