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Eni, Petronas JV Set to Become Southeast Asia's Upstream Giant, Wood Mackenzie Says

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Eni (E) and Malaysia's Petronas could reshape Southeast Asia's oil and gas sector through their joint venture, which is set to become one of the region's largest upstream operators and plans to invest $20 billion over the next five years, Wood Mackenzie strategists said in a Monday note.

Wood Mackenzie analysts said Searah, which combines 19 upstream assets across Indonesia and Malaysia, will begin operations producing over 300,000 barrels of oil equivalent per day and is projected to lift output to over 500,000 boe/d by 2029.

The consultancy estimates that the venture's longer-term production potential could exceed 800,000 boe/d, potentially making it Southeast Asia/s largest upstream producer by 2030, ahead of regional rivals including Pertamina, Petronas, PTTEP, Shell (SHEL) and BP (BP).

The 50:50 JV combines Petronas' producing assets and infrastructure in Malaysia with Eni's deepwater gas portfolio in Indonesia's Kutei Basin, creating a business with immediate cash flow alongside a pipeline of large-scale development projects.

Wood Mackenzie said the complementary portfolios provide the venture with a strong financial foundation, allowing it to fund expansion from producing assets rather than relying on additional capital from its parent companies.

Capital spending is projected to peak in 2027 as several major projects move forward simultaneously.

The venture is projected to generate annual cash flow exceeding $2 billion from 2030, driven by the development of Eni's Kutei Basin gas discoveries.

Eni contributes over 12 trillion cubic feet of undeveloped gas resources across the Rapak, Ganal and North Ganal production sharing contracts, Wood Mackenzie said, adding that the recently discovered Geliga field could add about $2 billion in value and support a third development hub in the basin.

Searah will supply gas to three liquefied natural gas facilities, including Indonesia's Bontang LNG plant, the proposed Abadi LNG project and Malaysia LNG, creating one of Southeast Asia's largest equity LNG portfolios.

However, Wood Mackenzie said execution would determine whether the venture achieves its ambitions.

The consultancy highlighted several challenges, including delivering multiple multi-billion-dollar offshore developments in parallel, advancing the Abadi LNG project to a final investment decision, managing capacity constraints at Indonesia's aging Bontang LNG facility and coordinating investments across Indonesia's and Malaysia's different regulatory systems.

The venture will also need to integrate Eni's exploration-focused operating model with Petronas' national oil company approach while navigating a tight global market for offshore engineering and construction services.

Searah's assets and capital are in place; the challenge is whether this newly formed operator can deliver multiple billion-dollar developments in parallel without losing schedule or cost discipline, said Munish Kumar, senior research analyst for upstream at Wood Mackenzie.

The venture represents the latest expansion of Eni's "satellite model" of creating standalone regional upstream companies, following Var Energi in Norway, Azule Energy in Angola and Ithaca Energy in the UK.

London-headquartered Searah will operate independently while receiving technical support from Eni under service agreements.

Price: $49.29, Change: $-0.48, Percent Change: -0.96%

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