TotalEnergies is actively expanding its upstream portfolio in Malaysia through exploration and planned acquisitions, with a focus on high-risk, high-reward frontier deepwater plays. The company, in partnership with Petronas, is preparing to drill the high-impact Mailu-1 wildcat offshore Papua New Guinea, a prospect described as potentially "company changing" but also risky, underscoring the importance of collaboration to share risk.

Exploration Strategy and Success in Malaysia

TotalEnergies is working to unlock the oil potential of the Sabah basin offshore Malaysia. Initial wells proved the existence of the petroleum system, but understanding of the reservoir and delivery mechanisms was incomplete. The subsequent Megah discovery advanced the understanding of accumulation and migration. The company plans to test the Tepat well this year in what is believed to be a sweet spot. The exploration technical success rate averages 35%, but the commercial success rate is significantly lower.

Petronas's Evolving Exploration Approach

Petronas has embraced a smarter exploration strategy, focusing on understanding larger areas rather than single prospects to better manage portfolio risk. This approach has increased the chance of success in recent years, both domestically and internationally. Despite exploration budgets shrinking from around 20% to a single digit of total upstream spending, Petronas made the Megah-1 discovery last year—Malaysia's largest find in over two decades. Located in deepwater Block 3K offshore Sabah, it has estimated reserves of 200-300 million barrels of oil equivalent. An appraisal well and a fast-track development involving an FPSO are under consideration.

TotalEnergies' Portfolio Expansion via Acquisitions

TotalEnergies is acquiring assets to boost its Malaysian portfolio. Last June, it agreed to acquire interests from Petronas in multiple blocks offshore Malaysia and Indonesia. The company will take a 50% operated interest in gas-rich blocks SK 310B and SK 313 offshore Sarawak. It is also set to join Petronas's Deepwater Block 3K, where work on the Megah discovery has begun. Furthermore, TotalEnergies is expected to soon acquire equity in PTTEP's Block SK 410B offshore Sarawak, potentially by taking all or part of Kufpec's 42.5% stake. This block contains the giant, unexploited Lang Lebah gas discovery. TotalEnergies declined to comment on these speculated deals.