With Malaysia looking to maximise its energy resources and stave off the inevitable day when they run dry, the nation's energy sector has recently been getting into deep water - literally.
The announcement earlier in September that Malaysia's state-owned hydrocarbon giant, Petoliam Nasional Berhad (Petronas) will be investing as much as RM2.5bn ($663m) in onshore facilities in Sabah underscored the importance of the deepwater reserves lying offshore.
The new facilities will consist of an oil and gas terminal, costing between RM874m ($231m) and RM988m ($262m). When completed in 2010, the terminal will have a capacity of 300,000 barrels per day (bpd) of oil and as much as 35.4m cu metres of gas per day, making Sabah a major regional oil and gas centre.
The investment will also provide a downstream ammonia and urea plant, costing over RM1.5bn ($390m) and adding value to the natural gas extracted from the South China Sea.
"This project is expected to generate significant socio-economic benefits to Sabah," explained Sabah's Chief Minister Musa Aman when speaking to the press on September 14, "both in terms of economic spin-offs and employment opportunities."
Musa then added that the terminal would process oil and natural gas from a number of new deepwater oil and gas fields located northwest of Sabah.
These new discoveries include ones made in the Kamunsu, Kebabangan, Kikeh, Limbayong, Gamusut/Kakap, Malikai, Ubah Crest and Kinabalu fields, where some 1.4bn barrels of oil and about 218bn cu metres of natural gas have been discovered since 2000.
The easing of tensions over rights to fields that straddle the Malaysian and Indonesian borders has also added to the resources available recently.
The new announcement continues deep water's status as a buzzword in Malaysian energy extraction. Back in June, at this year's Annual Asia Oil and Gas Conference in Kuala Lumpur, oil and gas services companies clamoured to market their deepwater technology to extractors in Malaysia.
Malaysian services and engineering companies want a slice of the pie too though, and have busily sought to equip themselves for the challenge as the need for onshore facilities has levelled out and offshore and deepwater have become a growing opportunity
However, "When you look at the Petronas twin towers, they are 450m tall," explains Shaharel Shafiei, the CEO of MMC Oil and Gas, Malaysia's fastest growing hydrocarbon engineering company. "When you talk about deepwater extraction, we are talking about three of those on top of each other. It's tough and we need to work with partners who have deepwater experience. There aren't so many people who have worked at that depth before though."
MMC Oil and Gas is therefore looking to form a joint venture with an international firm,
with a view to incorporating the eventual new entity.
Looking overseas is not just a search for partners to help out back home though. Like a number of Malaysian firms in the energy sector, MMC has been actively marketing its services abroad, as its expertise and experience has been in demand in other countries.
The firm's list of clients spans continents from North Africa to Vietnam. Heavy involvement in projects in Sudan, Iran and Qatar combine with potential involvement in Libya and Iraq to mean that MMC has not been short of business in recent years.
At the same time, the national flag carrier, Petronas, has also been active abroad with extraction and downstream operations. The company has activities in 34 countries, from Argentina to Australia and from Switzerland to South Africa. Petronas is not shy of hotspots either and is seemingly willing to go into places where other international oil and gas majors fear to tread, or aren't allowed.
Iran is one such country. There, Petronas is a major shareholder in the South Pars field, along with TotalFinaElf of France and Russia's Gazprom. The company also has interests in the Sirri A and E offshore fields with Total as a partner, and exploration activity in the Munir Block with Edison International as a partner.
Natural gas is the major interest in Iran though and with talks going ahead for a pipeline to supply gas from the South Pars to India via Pakistan, there is potential for some large engineering contracts to be won onshore.
Potential activity in Iraq has also been the subject of much speculation, and Petronas is known to have been investigating the opportunities in the war-ravaged country.
"The US is keen for them to come in and they have been in contact with the relevant authorities about it," explained a US State Department source to OBG recently. "Essentially, they are waiting for the security situation to simmer down a little though."
Meanwhile, on August 31 the announcement came that Petronas Carigali, the firm's overseas division, had won another concession in Sudan. Whilst the firm has significant interests in the country already, activity undertaken in conjunction with various partners, this new concession was its first offshore project in Sudan.
The Sudanese Block 15, for which the company has signed an Exploration and Production Sharing agreement (EPSA), covers 28,655 sq km of Red Sea basin - of which around half the area is in deep-water.
The plan is to drill five wildcat wells over the next six years whilst also exploring for gas in the block with partners Sudapet, China National Petroleum, and Express Petroleum of Nigeria.
There are hopes that exploration will spark downstream opportunities to which Petronas will no doubt try to add its own experience, especially since the firm had signed a contract worth around $1bn to build a 100,000 bpd refinery in Port Sudan three days before.
The onshore story will no doubt add value, but the deepwater moves are apparently the new specialisation for the Malaysian oil and gas sector.