Italian energy giant Eni and Malaysian national oil company PETRONAS have struck a transformative deal that could reshape Southeast Asia’s energy landscape forever. The agreement, signed at the prestigious ADIPEC energy conference in Abu Dhabi, creates an independent joint venture company under equal ownership. This strategic partnership combines decades of regional expertise with substantial financial firepower to unlock untapped energy resources. But the true scale of this venture’s ambitions extends far beyond what initial announcements suggest.
Strategic partnership establishes Southeast Asia energy giant
The new entity, called NewCo, will be responsible for managing a vast portfolio of assets consisting of 19, spread across two strategic markets, with 14 operations located in Indonesia and five market operations situated in Malaysia. The combined effort is expected to involve considerable enterprise value, effectively making it one of the big players within Southeast Asia’s dynamic energy market due to its comprehensive technical expertise and operating acumen available through this enterprise initiative.
NewCo will be a financially autonomous business with aggressive growth plans that cover several development phases. NewCo starts its operations with a primary production capacity of more than 300,000 barrels of oil equivalent per day, providing a strong platform for future growth. By optimizing its resources, as well as implementing new development projects, this business plans to enhance its sustainable production capacity above 500,000 barrels of oil equivalent per day within the medium-term plans.
An equal ownership structure helps create a balance of decision-making
By having a 50-50 ownership ratio, PETRONAS and Eni have optimal governance and merge their respective expertise and market acumen collectively and effectively through this equal model of partnership that enables efficient decision-making and maintains synergy and cooperation between their parent firms throughout the operation lifecycle of this business venture.
Massive investment program targets unprecedented resource development
NewCo is expected to invest more than $15 billion over the coming five years, marking one of the greatest exploratory investment efforts by Southeast Asia recently, as this huge capital outlay will enable new projects of at least eight and exploratory drilling of at least 15 exploration wells, covering exploration and production opportunities of around 10 billion barrels of oil equivalent, alongside resources of about 3 billion barrels of oil equivalent that have already been discovered.
Claudio Descalzi, CEO of Eni, stressed that this is a transformational agreement, as he explained, “This agreement is a transformational moment for Eni. We have combined forces with PETRONAS to develop and maintain assets in Indonesia and Malaysia, and we create synergies of assets, know-how, and financial resources.”
Exploration and development opportunities for this venture target not only mature producing fields, but exploration opportunities as well. By targeting exploration and development on both fronts, this enables NewCo to continue generating revenue on one hand, while on the other, it is able to grow through exploration and development projects that are undertaken on a strategic basis.
Satellite model strategy drives Eni’s international growth
This represents yet another success within Eni’s Satellite model strategy implementation, following other successes achieved through satellite ventures such as Var Energy, Azule, and Ithaca, in Norway, Angola, and the United Kingdom, respectively. It is through this satellite strategy that Eni has managed to develop projects and capitalize on synergies, as well as linking up with local expertise that aligns its strategic goals.
By establishing NewCo, these two companies will be able to capitalize on future growth prospects while ensuring that risk is mitigated by their combined expertise and resources. By strengthening these two companies’ footholds during the ever-evolving energy scene in Southeast Asia, NewCo has all the potential of becoming one of the most prominent upstream players within the energy landscapes of Malaysia and Indonesia, based on its combined technology and market expertise, and resources.
