“A joint venture between Eni and PETRONAS would create a new Southeast Asian ‘Major’” stated Andrew Harwood, Vice President for Corporate Research, Asia Pacific at Wood Mackenzie, addressing the announcement of discussions between the Italian major and the Malaysian national oil company (NOC).
The pair have announced their aim to combine select upstream assets from their Indonesia and Malaysia portfolios to form a new, standalone and self-funded joint venture. This venture is expected to have approximately 3 billion boe in reserves and with a combined equity production target of 500 000 boe/d in the medium-term.
While the exact asset composition has yet to be confirmed, Wood Mackenzie believes the joint venture will be centred on Indonesia, including Eni’s substantial holdings in the Kutei Basin and PETRONAS’ stake in the giant Abadi LNG development. Additionally, Wood Mackenzie anticipates that PETRONAS will contribute production and exploration assets in Sarawak and Sabah from its domestic portfolio. PETRONAS's largest domestic producing asset is the SK316 block in Sarawak, which includes the Kasawari development.
“This proposed joint venture is more innovative and broader in scope than the industry anticipated,” said Harwood. “The new entity would benefit from Eni’s industry-leading exploration capabilities and PETRONAS’ strong regional presence, creating a powerful player in the Southeast Asian energy landscape. The combined entity would be well-positioned to progress new gas supply and infrastructure projects while also pursuing high-impact exploration opportunities across the region.”
Harwood noted that for Eni, this move follows similar successful ventures in Angola (Azule Energy, in partnership with BP), Norway (Var Energi), and the UK (Ithaca). Previous spin-offs by Eni aimed to unlock value from non-core assets that struggled to attract capital within a larger portfolio. However, the situation is different this time. Due to the successful capture of organic and inorganic growth opportunities, Indonesia is set to become one of the largest producing countries in Eni’s global portfolio by the early 2030s.
“Managing capital commitments, unlocking new growth opportunities and broadening strategic relationships are the key drivers behind the formation of the new venture. For Southeast Asia, the creation of a new technically capable and well-funded operator, with a mandate to pursue new growth, could be the key required to unlock the region’s significant untapped potential,” Harwood concluded.
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