Development in Oil & Gas Sectors in Malaysia

Pui Thai ChongHead, Myanmar Operations, PETRONAS

21 – 23 September 2016

Nay Pyi Taw, Myanmar

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Contents•Who we are•Our core business•Our experiences: Oil & Gas Development• Conclusion

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Agile Development & GrowthTransformation of an NOC into a global energy champion• Founded as an NOC but operating as a public-listed IOC (incorporated as a company)

• Our unique NOC model has helped paved the way for PETRONAS to evolve over four decades into an oil & gas company with international presence

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Our CoreBusiness

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Fully Integrated Business with Diversified International OperationsMaximise and add value to oil and gas assets

Exploration & Production ventures in more than 20 countries LNG in Egypt,

Australia, Malaysia and

Canada

Refineries and petroleum product retail leader in Malaysia and South Africa

Worldwide Operations

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- Export Sector

- Power Sector- Industry Sector

- Residential and Commercial Sectors

- Industrial Sector: Ethylene, Methanol, MTBE, Polyethylene, Propylene, Urea and VCM

- Transportation Sector: Diesel, Gasoline, Jet Fuel and Lubricants

Our experiences: Driving Oil & Gas development

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An established industry:Malaysia’s Oil & Gas industry is established as an attractive and stable investment destination, with many successful projects known worldwide

96 Production Sharing Contracts (PSCs)

5 Risk Service Contracts (RSCs) 22 companies awarded

operatorship and 17 companies as non-operating partners

Malaysia’s E&P Industry

Gumusut-Kakap FPS2nd heaviest topside

6th biggest hull in the world

Kikeh SPAR 1st SPAR in operation outside Gulf of

Mexico

Notes: • FPS is Floating Production System• SPAR is Single Point Anchor Reservoir

93 Producing Fields

189 Discovered Fields

Data as of August 2016Source: 1.1.2016 ARPR

Pengerang Integrated Complex[under construction]

Sabah Oil & Gas Terminal(SOGT)

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Continuous improvements have been made to Malaysia’s Petroleum Arrangements since adopting the PSC system in 1976, to address the ever changing environment to enable monetisation of technically challenging resources

Production Rate/Volume Based

Profitability Based Performance Based

Ensure fair returns/rewards to successful investors based on prospectivity & level of risk

Encourage re-investment to sustain production life of discovered fields and finding new discoveries

Adopt partnership approach in dealing with foreign investors

Create conducive work environment to facilitate business activities

PVB

2012DW Gas

PSC

2011

RSC

2011HP/HTPSC

2008

R/C PSC

1997DW/

Ultra DW PSC

1994

1985 PSC

1985

1976 PSC

1976Concession Agreement

Pre-1976

The conscious “evolution” of Malaysia fiscal terms have managed to spur investments and attract new players into Malaysia E&P over the years

1994 1997 2003 2010

Reduced chargeable tax from 45% to 38%

Deduction of Abandonment CESS

Contribution

Qualifying Plant Allowances, Secondary

Gas Recovery

Investment Tax Allowance, QEE, Small

Field Incentives

The Malaysian Government have been supportive on changes made in the PITA as continuous improvements to attract investment from current players as well as new players.Internal

On the part of Malaysian Government, significant amendments to the Petroleum (Income Tax) Act 1967 (“PITA”) have also taken place to address new business requirements

• Three integrated LNG plants, sourcing supply from over 150 offshore platforms

INTEGRATED

• With total capacity of up to 26 MTPA, one of the world largest LNG production facilities on a single location

LARGEST SINGLE LNG LOCATION

• The new Train 9 commence operation since mid 2016, adding total capacity to 29 MTPA

EXPANDING

PETRONAS LNG Complex

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PETRONAS FLNG 1

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Equivalent to the distance between Huston, Texas to Phoenix, Arizona

Electrical & Instrument cabling of about1,600 km 1 million bulbs

4 million energy saving bulbs100,000 refrigeratorsPower a small city of 100,000 pax

6 times the weight of an LNG carries

Weight

Exploring Opportunities Through Innovation & TechnologyPETRONAS FLNG 1

Knowledge Sharing with PEMEXStrategic Relations, CSR, MPMAugust 2016 ©Petroliam Nasional Berhad (PETRONAS) 2016 11

Thank you

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Supporting Info

Five types of tax incentives are introduced to unlock & monetize stranded resources

• Encourage development of capital intensive projects by contractors (EOR, High CO2 gas field, HPHT, Deepwater, Infrastructure for petroleum operation)• Improve contractors’ cash flow and shorten breakeven point.

1. Investment Tax Allowance(ITA) : 60% of qualifying CAPEX for capital intensive projects

• Improve commerciality of the development

2. PITA tax rate reduction from 38% to 25% for marginal field development

• Full utilization of capital cost deduction could improve project economics.

3. Accelerated Capital Allowance (CA) from 10 years to 5 years for marginal field development

• Improve commerciality of the development

4. Export Duty Waiver on oil produced and exported from marginal field development

• Encourage exploration activity through enhancing contractor’s risk-taking attitude

5. Transfer of Qualifying Exploration Expenditures (QEE)

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Supporting Info

Malaysia experiencePETRONAS has made significant upstream and downstream investments to drive gas development

Creating Market

• PETRONAS LNG Complex (PLC), Bintulu

• Gas Processing Plants (GPP)

• Integrated Petrochemical Complex (IPC)

• Mega Methanol Plants

• Sabah Oil & Gas Terminal (SOGT)

• Peninsular Grid Utilisation (PGU)

• Sabah-Sarawak Gas Pipeline (SSGP)

• Extensive network of offshore gas pipelines

• Floating LNG

0

200

400

600

800

1,000

1,200

1,400

Malaysia Gas Production

In ‘000 barrels of oil equivalent per

day (kboe/d)

Fo

re

ca

st

1983:1st LNG Shipment to Japan

1987: • F6

1992: GPP expansion

Jerneh

1982:• 1st LNG

Plant

~ 15 new gas fields onstream

>30 new gas fields on stream

1984:Duyong & E11/F13W

Labuan Gas Terminal (LGAST 1)

1st Gas Processing Plant (GPP)

PGU I

1985:M3

2008:Labuan Gas Terminal 2 (LGAST 2)

2014:Sabah Oil & Gas Terminal (SOGT)

Kebabangan

Developing natural gas Unprecedented growth in gas

Sustaining gas sales

1980:Samarang

1995:• MLNG• Dua

1997:Sabah Gas Terminal

Lawit

UpstreamDownstream

1998: GPP expansion (GPP5 start-up)

PGU III

1996:M1

2003:B11

MLNG Tiga

Technology

Gas“Highways”

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