Exxon Mobil Corp. has reached an agreement to sell its Malaysian oil and gas assets to the state energy firm Petronas, marking its exit from Malaysia’s upstream sector. This move concludes Exxon’s significant presence in the region, where it has been a dominant producer for many decades. The decision to sell its aging assets aligns with Exxon’s broader strategy to concentrate on more lucrative oil production ventures in the Americas, particularly in the Permian Basin.
ExxonMobil has been trying to divest its Malaysian upstream assets since 2020. The assets sold to Petronas include the iconic Tapis oilfield in Terengganu, which started production in 1978. This transfer of operations will also see Exxon’s staff being absorbed by Petronas, ensuring continuity and expertise within the operations.
The deal, while not fully disclosed in terms of financial specifics, represents a strategic shift for ExxonMobil as it continues to streamline its global operations. Last year, Exxon marked its 130th anniversary in Malaysia, underlining a long history of significant contributions to the country’s oil and gas sector. The company has been responsible for approximately 40% and 50% of Peninsular Malaysia’s crude oil and natural gas production, respectively.
ExxonMobil’s presence in Malaysia includes operating 35 oil and gas platforms across 12 fields offshore Terengganu and holding interests in another 10 platforms in five fields in the South China Sea. These combined operations account for about 15% of Malaysia’s crude oil production and more than half of Peninsular Malaysia’s natural gas production, producing over 2 billion cubic feet per day.
ExxonMobil’s last major investment in Malaysia was a $2.5 billion enhanced oil recovery project at the Tapis field, which began operations in late 2014. This investment was part of Exxon’s broader efforts to sustain its production levels in the region despite the aging nature of the fields.
The sale also comes at a time when ExxonMobil is increasingly focusing on carbon capture and storage (CCS) projects. Recently, ExxonMobil and Petronas signed agreements to develop CCS projects in Malaysia, which aligns with their mutual goal of reducing carbon emissions and supporting sustainable energy production. This collaboration further cements the longstanding partnership between the two companies, which has seen numerous joint ventures and significant technological and operational synergies over the years.
In summary, Exxon’s exit from Malaysia’s upstream sector is a significant development in the global oil and gas landscape, reflecting broader industry trends towards asset optimization and strategic refocusing. The transfer of these assets to Petronas ensures that Malaysia’s oil and gas production capabilities remain robust, supported by the expertise and resources of the national oil company.
