Boston, MA -- (SBWIRE) -- 12/10/2013 -- Malaysia's upstream segment could see good days ahead in the short-to-medium term as the completion of both greenfield and brownfield developments brings new volumes of oil and gas online. New gas supplies will underpin continued expansion in the country's liquefied natural gas production based in Sarawak. Consumption growth will limit some of the export gains to be made from growing output, though a reduction of oil and gas subsidies would see a slowdown in the rate of this. The expansion of its downstream capacity could be more challenging, as it would face fierce competition from neighbouring Singapore.

The main trends and developments we highlight for Malaysia's oil and gas sector are:

- Our expectations for growth in its oil and gas reserves are underpinned by resource upgrades stemming from exploration and development activities in three areas: deepwater, marginal and stranded fields, and enhanced oil recovery (EOR) projects in mature fields.
- Oil and gas production are set to grow, thanks to the development of large discoveries made in recent year. For oil in particular, investment into marginal fields could support a short-term increase in production till larger and more complex deepwater projects come on-stream.
- We expect oil production to continue climbing upwards from a forecast of 687,300b/d in 2013 to 845,900b/d in 2017. We forecast a peak in production at about 993,330b/d in 2019. However, based on projects in the pipeline, we do not expect Malaysian oil production to ramp-up past the 1mn b/d level within our forecast period.
- A string of prolific discoveries and major projects set to come online between 2013 and 2018 would see gas production continue on an upward trend. Nearly all of these new projects are off the coast of Sarawak, East Malaysia, which will in turn support liquefied natural gas (LNG) production growth at Petronas' LNG complex.
- We are expecting the uptrend in gas production to continue in the short-to-medium term. From a forecast of 68.27bcm in 2013, we project output to hit 80.97bcm in 2017 and continue to climb to 83.62bcm by 2019. Although we currently forecast for a slight fall from 2020 onwards based solely on projects in the pipeline, we highlight that there is significant upside risk to the tail-end of our forecasts to 2022 and will revise these forecasts once more light is given on development plans for announced discoveries.

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