The next quarter-century in Malaysia

This article originally appeared in the Lamp, 2008 — Number 2

An agreement toward a new production sharing contract builds on 115 years of growth with one of ExxonMobil’s most successful energy partners.

The highest quality crude oil in the world is a light, sweet grade known as Tapis. It’s named after the Tapis field, off the east coast of Peninsular Malaysia, one of 17 fields operated by ExxonMobil in partnership with the national oil company PETRONAS.

A recent agreement in principle was reached to extend the partnership in the same oil field for the next 25 years.

“Few relationships in our industry have lasted as long as our 115-year involvement in Malaysia,” says Mark Albers, Exxon Mobil Corporation senior vice president.

“We watched proudly as PETRONAS grew from an emerging national oil company into a highly respected supplier of energy on an international scale. Our relationship has grown too, and is now a global partnership.”

Under the agreement, ExxonMobil Exploration and Production Malaysia Inc. — the upstream affiliate in the country – will make significant capital investments to help sustain energy supplies for the nation. These include investments in conventional oil development, satellite fields adjacent to the existing infrastructure of offshore platforms as well as production facilities and pipelines. Advanced technology will allow increasing recovery of oil and gas deposits that otherwise would have been too expensive to develop.

“Through this agreement, we will continue applying ExxonMobil’s world-class technologies and project-execution capabilities to efficiently develop Malaysia’s petroleum resources,” Albers says.

A reliable business partner

As a place to invest, Malaysia is particularly attractive by many measures. It is stable politically with good infrastructure, and the people are ethnically diverse and well-educated. The government strives to make the business climate favorable for international investors. Foreign direct investments have been instrumental in the transformation of the nation, and will continue to remain important in the future.       

“We have a long history here, and we have been treated well,” says Rich Kruger, president, ExxonMobil Production Company. “To deliver on our commitments, we will have to continue bringing ExxonMobil’s people, technology and best practices to bear. We are able to do that with a lot of confidence that it will be of value for us and for Malaysia as a country.”

A model for utilization of natural resources

Malaysia’s leaders have used their nation’s resources to grow a strong, diverse and modern industrial base. Petroleum resources have fueled the economy and helped the country diversify and become a significant exporter of semiconductors, electrical appliances and communication technology. According to the U.S. State Department, Malaysia’s economic record is one of the most impressive in Asia.

“Malaysia has become a model for taking a wealth of natural resources and converting it to sustainable economic development,” Kruger says.

Since offshore development began in earnest three decades ago, Malaysia has developed local capacity to build much of the equipment it needs. The country has a large pool of experienced and capable workers and contractors that are much in demand in the global energy industry. ExxonMobil has used in-country contractors and fabrication yards employing thousands of Malaysians to build facilities for the company’s developments in West Africa and elsewhere. More than 95 percent of ExxonMobil’s 1,200 employees there consist of Malaysian nationals.

“From a people standpoint, our Malaysian employees are highly competitive global resources,” Kruger says. “We have more than 100 Malaysian technicians, geoscientists, engineers and managers working outside of their home country to support our international operations. That diversity adds to the value ExxonMobil brings wherever we are in the world and further strengthens the capabilities in Malaysia as these employees return home with a wealth of experience.”