Dato' Wee Yiaw Hin is executive vice president of Petronas Exploration & Production Can you tell us about Petronas' upstream strategy and if it has delivered the results expected? As Malaysia's basins mature, we laid clear strategies to arrest reserves and production decline. Among others, it involved unlocking our stranded resources, designing innovative contracts, developing marginal fields, seating our assets, and intensifying our exploration efforts. That approach resulted in strong performance in 2013. Petronas' production rates have crossed more than 2 million BOEPD, with about two-thirds of this contributed by fields in Malaysia.
Dato' Wee Yiaw Hin, SPE, was appointed executive vice president and CEO of upstream business for Petronas, Malaysia's national oil company. Wee Yiaw Hin is a member of Petronas' board of directors, executive committee, and management committee and also sits on the boards of several companies within the Petronas Group. He served as a director of the SPE Northern Asia Pacific Region on the international SPE Board of Directors and is currently a member of the SPE Asia Pacific Board of Directors. Wee Yiaw Hin joined Petronas in May 2010 as executive vice president for its exploration and production business. Before that, he worked at Talisman Energy Malaysia, serving as vice president.
The eighth International Petroleum Technology Conference (IPTC) will return to Kuala Lumpur for the second time in December. Themed "Innovation and Collaboration: Keys to Affordable Energy," the event will be held on 10–12 December 2014 at the Kuala Lumpur Convention Centre. The annual conference, which rotates between Asia Pacific and Middle East sites, is organized to advance scientific and technological knowledge related to the exploration, development, production, transportation, and processing of oil and natural gas. The conference's program focuses on the upstream oil and gas value chain, from subsurface technologies used in exploration and production to the transportation of hydrocarbons. Conference sponsoring organizations include the American Association of Petroleum Geologists (AAPG), the European Association of Geoscientists & Engineers (EAGE), the Society of Exploration Geophysicists (SEG), and SPE.
As the oil and gas industry weathers a transitional phase brought on by a drop in oil prices, burgeoning markets in Southeast Asia stand poised to establish themselves as legitimate players in the future. Attendees of the recent Offshore Technology Conference Asia in Kuala Lumpur saw the myriad ways in which the region's potential could make it into an industry stronghold. In a series of sessions devoted to individual countries in the Asia Pacific region, representatives from national oil companies, multinational operators, and service companies presented their thoughts on the roles they will play in the overall development of the region and the global oil market. Panel speakers at the China country session described a country flush with natural resources but unable to exploit them to the fullest extent. Led by its national oil company, the China National Petroleum Corporation (CNPC), the country is eager to acquire the tools needed to increase production from its oil and gas reserves.
Germany's DEA Deutsche Erdoel AG has agreed to acquire privately held Sierra Oil & Gas, interest owner in six blocks in Mexico, including the giant Zama discovery. Sierra holds a 40% nonoperated interest in the 465-sq-km Block 7 containing much of the shallow-water Zama discovery, where appraisal drilling is under way. Zama is estimated to hold 400–800 million BOE of recoverable resources with estimated peak output of 150,000 BOE/D. Production is expected to start up by 2022–2023. Talos Energy is operator and Premier Oil is the other partner.
Mubadala Petroleum, Petronas, and Royal Dutch Shell have reached final investment decision (FID) for the Pegaga gas field development. The three companies will partner to spend more than $1 billion developing the project, which will now proceed to the construction and installation stage. Pegaga is located at about 108 m water depth in Block SK 320 offshore the East Malaysian state of Sarawak. The development consists of an integrated central processing platform (ICPP) with an eight-legged jacket. The facility is designed for gas throughput of 550 million scf/D of gas plus condensate.
The next big wave of decommissioning and abandonment (D&A) projects is set to occur in the Asia-Pacific (APAC) region, and APAC's operators are now tasked with finding cost- and time-effective ways of unwinding their huge agglomeration of wells and facilities. Research consultancy Wood Mackenzie in 2018 forecast that around 380 fields in the region--APAC is home to some 2,600 platforms and 35,000 wells--would cease production over the ensuing decade, with costs exceeding $100 billion. The biggest challenges center on the relative newness of D&A in the region along with the diverse set of regulations that vary country by country. There is not a single regime covering one large area like in the North Sea or US Gulf of Mexico, the regions recognized as leaders in D&A. There is no single database of wells, platforms, subsea facilities, and pipelines for operators and regulators to access.
After a sustained cost reduction spawned by the oil price downturn, deepwater projects look prime to make a comeback. A Wood Mackenzie report published in late November estimated a 50% drop in the cost of developing new deepwater barrels since 2013, a drop driven primarily by lower rig costs, lower drilling times, and greater emphasis on efficient project execution. While the average deepwater project saw 10% to 15% cost overruns from sanction to startup from 2006 to 2013, that figure dropped to 5% from 2014 to 2016. This has created a more favorable investment environment for operators and private equity in the near term: Wood Mac expects deepwater investment to increase from $50 billion to a peak of nearly $60 billion by 2022. "We've had a window of low oil price and low capture costs, so really it's been a period of rebuilding out inventory, our approach to exploration, and making sure we deliver the successes that we anticipate," said Kevin McLachlan, senior vice president of exploration at Total.
ExxonMobil is considering a sale of its Malaysian upstream offshore assets. Bloomberg reported that the major is said to be working with advisers on a potential sale, which could raise between $2 billion and $3 billion. The report comes a month after Exxon sold its remaining Norwegian portfolio to Var Energi for $4.5 billion, and 3 weeks after news broke of the company's intention to sell its 50% stake in the Gippsland Basin development in Australia's Bass Strait, which could net $3 billion. ExxonMobil is looking to divest about $15 billion in nonstrategic assets by 2021. The company operates under four production sharing contracts with Petronas, producing approximately one-fifth of the nation's oil production and around half of natural gas supplies to Peninsular Malaysia.
A sharp decline in oil prices is pushing oil and gas companies to innovate to increase efficiency and prepare to meet the world's long-term energy needs, panelists said at the International Petroleum Technology Conference (IPTC) held in Kuala Lumpur, Malaysia, in December. Under the theme of "Innovation and Collaboration: Keys to Affordable Energy," the IPTC attracted an attendance record 10,318 industry professionals from 68 countries. Hosted by Malaysian state oil company Petronas and cohosted by Shell and Schlumberger, the conference featured a ministerial session, high-level plenary and panel sessions, a comprehensive multidisciplinary technical program, an exhibition, a young professionals workshop, and various educational activities. The 3-day conference was opened by Dato' Sri Abdul Wahid Omar, a minister in the Office of the Prime Minister of Malaysia, who delivered the keynote speech about the paradox of energy affordability. One side is positive, with more affordable prices for those buying oil and gas, thus aiding consumers and the economy.