Italy’s Eni and Malaysia’s Petronas plan to establish a joint venture company to oversee selected upstream assets in Indonesia and Malaysia.
The two firms announced on Thursday an exclusive memorandum of understanding to progress detailed discussions on establishing the JV.
According to the duo, the company’s formation is expected to “generate substantial synergies towards becoming a major LNG player in the region, while delivering in the medium term a sustainable 500 kboepd production.”
The JV will combine approximately 3 billion barrels of oil equivalent (boe) of reserves with an additional 10 billion boe of potential exploration upside.
Moreover, the joint venture will focus on investing in new gas development projects, supporting the increasing regional domestic gas demand.
Eni and Petronas also plan to develop a “comprehensive” business plan to capture future opportunities in exploration, development, and potential portfolio growth.
Under this arrangement, the assets will retain their current operational structure, while the new company will leverage the competencies and financial capabilities of both Eni and Ppetronas and is expected to raise external financing on a standalone basis.
Both Eni and Petronas have informed the Indonesian and Malaysian governments of their intentions.
Any final transaction will be subject to relevant governmental, regulatory, and partner approvals, the two firms said.
Petronas has the giant Bintulu LNG plant in Sarawak, Malaysia, and two floating LNG producers, both located offshore Sabah, while Indonesia hosts the Bintulu LNG export plant.
Eni is working on a new production hub in the Kutei basin, offshore Indonesia, and previously said it plans to send gas supplies from its Geng North discovery to Pertamina’s Bontang LNG facility in East Kalimantan.