Exploration and production activities in Sarawak, the birthplace of Malaysia's oil industry, are intensifying with a modern focus on natural gas as the key fuel for future economic growth. Major players like Petronas Carigali and Thailand's PTTEP are leading significant offshore investments, aiming to supply the large Petronas LNG Complex in Bintulu.

Major Developments and Strategic Partnerships

Petronas Carigali and PTTEP are advancing new field developments while appraising discoveries. Petronas recently returned to appraise its Bendai gas discovery. PTTEP aims to sanction its SK405B and SK438 shallow-water projects for a 2028 production start, and formed a strategic partnership with TotalEnergies, acquiring an interest in the producing Block SK 408. However, PTTEP's major Lang Lebah project in Block 410B, with substantial gas resources, faced a postponed final investment decision in early 2025 due to high costs and complexity, requiring a re-engineering of the development plan.

Future Exploration and Seismic Initiatives

Future exploration includes Japan's Inpex planning to drill the Kertang prospect on deepwater Block 2A in 2026 or 2027, which holds significant prospective resources. To support future exploration, major seismic projects are underway. TGS launched a large multi-client seismic survey covering the offshore basin, and Viridien, in collaboration with Petronas, is reimaging legacy 3D data in prolific basins to resolve geological challenges and unlock new plays.

Onshore Potential and Legal Dispute

Onshore potential remains, highlighted by the Adong Kechil West discovery, which is under development with expected start-up in 2026. Petros has also signed a joint study agreement with Jogmec for onshore surveys. However, a protracted legal dispute between Petronas and Petros over gas marketing rights and payments casts a shadow over the sector. This dispute entangled Shell in 2025 regarding payments for Bintulu gas, and although negotiations for a resolution were expected, the matter remains unresolved in the courts, potentially impacting the upcoming Malaysia Bid Round 2026 licensing round.