By Christie U. Omonigho
Italian Eni and Malaysian PETRONAS have announced their intention to create a new Southeast Asian Major in a joint venture partnership. The venture is expected to have approximately 3 billion barrels of oil equivalent (boe) in reserves and with a combined equity production target of 500,000 barrels of oil equivalent per day (boed) in the medium-term, says a statement posted to Energy Window International by email but with further bites by Andrew Harwood, Woodmac’s research analyst within the Asian Pacific. PETRONAS is the Malaysian National Oil Company.
Both companies have announced their aim to combine select upstream assets from their Indonesia and Malaysia portfolios to form a “new, standalone and self-funded” joint venture, with combined reserves before take-off approximated at 3 billion barrels of oil equivalent (boe), as well as a combined equity production target of 500,000 barrels of oil equivalent per day (boed) in the medium-term, on the minimum.
While the exact asset composition has yet to be confirmed, Woodmac says it believes the joint venture will be centred on Indonesia, “including Eni’s substantial holdings in the Kutei Basin and PETRONAS’ stake in the giant Abadi LNG development.” Woods also said it anticipates that PETRONAS would contribute production and exploration assets in Sarawak and Sabah from its domestic portfolio. PETRONAS’s largest domestic producing asset is the SK316 block in Sarawak, which includes the Kasawari development, Energy Window International has gathered.
“This proposed joint venture is more innovative and broader in scope than the industry anticipated,” Harwood said. “The new entity would benefit from Eni’s industry-leading exploration capabilities and PETRONAS’ strong regional presence, creating a powerful player in the Southeast Asian energy landscape. The combined entity would be well-positioned to progress new gas supply and infrastructure projects while also pursuing high-impact exploration opportunities across the region.”
This was while noting that for Eni, this move had followed similar and successful ventures in Angola (“Azule Energy, in partnership with BP), Norway (Var Energi), and the UK (Ithaca.”) Previous spin-offs by Eni aimed to unlock value from non-core assets that struggled to attract capital within a larger portfolio. “However the situation is different this time,” Harwood said. Adding that due largely to the successful capture of organic and inorganic growth opportunities, Indonesia is set to become one of the largest producing countries in Eni’s global portfolio by the early 2030s.
“Managing capital commitments, unlocking new growth opportunities and broadening strategic relationships are the key drivers behind the formation of the new venture. For Southeast Asia, the creation of a new technically capable and well-funded operator, with a mandate to pursue new growth, could be the key required to unlock the region’s significant untapped potential,” Harwood concluded.