KUALA LUMPUR: Malaysia Petroleum Resources Corp (MPRC) will be set up by the government to attract foreign investment and help local players become regional champions in order to develop the country into a regional oil and gas (O&G) hub.

Dr Shahreen Madros, the interim CEO of MPRC, said details on the agency are expected to be announced by the prime minister in the coming weeks.

“We need to make Malaysia into a services and manufacturing industry and grow that, so that by 2020, hopefully, our local O&G companies will be regional champions,” he said.

Malaysia already has a good distribution system locally, he said, and must look at converting itself into an O&G centre that is benchmarked against other O&G hubs such as Aberdeen in the UK and Houston in the US.

MPRC, which will report to the prime minister, will look into policies and regulation trends to nurture local players and will  work closely with national oil outfit Petroliam Nasional Bhd (Petronas) to develop available resources and attract investors the industry. Shahreen said MPRC would also look at the entire value chain to identify gaps that can be further developed to lift Malaysia into the high-income bracket.

Scomi Group Bhd CEO Shah Hakim Zain, meanwhile, said Malaysia has the right criteria to become an O&G hub as it has strong government support, good living conditions and ample talent and funding.

Shahreen noted that sustainability is an issue and Malaysia may be at risk of reducing production to 400,000 barrels a day in 2020 from about 600,000 barrels currently.

To this end, Petronas executive vice-president of exploration and production Datuk Wee Yiaw Hin said the national oil company was looking to enhance oil recovery and step up development of marginal oilfields and deepwater exploration.

Petronas is receiving bids from niche players to develop more marginal oilfields in the country’s waters and is looking into making its other clusters of marginal oilfields more effective.

“The era of easy oil is over. Reservoirs are smaller, we need to go into even deeper waters where there is high carbon dioxide content,” Wee said.

He noted that demand would continue to grow and supply would still somehow have to keep up. Thus, there is a need to incentivise more exploration and production activities, including reducing taxes, accelerating capital allowances and waiving export duties, Wee said.

This article appeared in The Edge Financial Daily, April 14, 2011.