AS the world transitions toward cleaner energy sources, fossil fuels remain essential for ensuring a stable and reliable energy supply in a world transitioning
Recognising this ongoing need, Dagang NeXchange Bhd’s (Dnex) energy division, Ping Petroleum Ltd, has adopted a strategic focus on optimising existing brownfield assets.
This approach aims to maximise the value of mature fields while minimising environmental impacts, demonstrating a balanced approach to energy production and sustainability.
Lower-risk investments
Ping Petroleum’s strategy revolves around enhancing the efficiency and productivity of existing fields rather than embarking on high-risk exploration ventures, says Paul Baltensperger, the chief executive officer of Ping Petroleum UK PLC and executive vice-president of business development of Ping Petroleum.
“We don’t engage in high-risk exploration. Instead, we focus on lower-risk investments, particularly in producing fields or those that have already been discovered,” the American tells StarBizWeek during an exclusive interview.
He says this approach is evident in the company’s flagship project, the Anasuria floating production storage and offloading (FPSO) vessel in the United Kingdom.
Acquired from Shell and ExxonMobil, the Anasuria cluster represents a model of Ping Petroleum’s asset optimisation strategy.
When the company took over, the average production efficiency uptime was around 68%.
Through targeted improvements, Paul says Ping Petroleum increased this figure to an impressive 93% last year, and it currently averages over 90%.
Another notable achievement at Anasuria has been the reduction of operating costs.
Initially, when acquired, Paul says the cost was about US$44 per barrel for the Anasuria asset.
Through operational efficiencies, Ping Petroleum successfully reduced this to the low US$20.
Although costs have slightly increased to the US$24 to US$26 range due to a decrease in production, the company has still managed to cut operating expenses by nearly 40% from its original figures.
Paul says this reduction in costs, coupled with increased production and improved uptime, highlights Ping Petroleum’s ability to manage and optimise producing assets effectively.
In addition to financial efficiency, Ping Petroleum has made significant strides in environmental performance.
At Anasuria, the company has achieved an 80% reduction in flaring emissions and a 40% decrease in overall emissions.
These improvements align with the company’s commitment to reducing its environmental footprint while maintaining high levels of production efficiency.
Expanding operations
Building on their success in the United Kingdom, Ping Petroleum is now focusing on expanding its operations in Malaysia.
In 2023, the company secured three new licences, including the Meranti and Abu clusters.
This expansion reflects Ping Petroleum’s strategy of replicating its successful UK model in Malaysia.
The Abu cluster is a key focus area for Ping Petroleum for the near term.
Towards this end, Ping Petroleum deputy CEO and vice-president of development Tarmizi Yusof Azuddin says the company plans to invest approximately US$50mil in this cluster over the next 12 months, with expectations of achieving near-term cash flow benefits.
Additionally, Ping Petroleum has signed a new production sharing contract for the small field asset cluster with Petroliam Nasional Bhd. This contract encompasses fields such as Bubu, Bunga Tasbih, and Enau, located about 250km from the east coast of Peninsular Malaysia.
This contract is part of the company’s broader strategy to enhance its presence in the region.
Tarmizi says Ping Petroleum’s approach in Malaysia is designed to mirror its successful operations in the United Kingdom.
The company aims to optimise existing infrastructure, maximise production efficiency, and leverage local capabilities.
“By controlling and owning the infrastructure, we can optimise production and facilitate third-party tiebacks, sharing operating costs among multiple fields. This approach benefits both us and our partners by reducing capital costs and maximising asset value,” the CEO explains.
A prime example of this strategy is the Anasuria floating production storage and offloading (FPSO) in the United Kingdom, which hosts four oil fields.
The shared infrastructure of the FPSO allows for reduced operational costs by spreading these costs across multiple fields rather than a single one.
“Our key focus is to optimise what we have in our existing production, sweat the asset, and extract every single barrel with the minimum cost and maximum efficiency,” Tarmizi notes.
“So, it’s actually a win-win. For people that tie back, they can reduce their capital cost. For us, as the host, we will share the operating expenditure.”
Meanwhile, technological advancements play a crucial role in Ping Petroleum’s strategy.In the United Kingdom, the company has invested in upgrading its infrastructure to improve production efficiency and reduce emissions.
For instance, Ping Petroleum has enhanced its compression systems and worked on reducing flaring emissions.
“What comes along with that is not only reduced emissions, but also more profitability, more oil production for the operators,” Paul adds.
Meanwhile, earlier in April, Ping Petroleum UK expanded its North Sea portfolio with an additional three licences.
Regarding the three new licences, Paul explains: “That’s been part of our growth strategy—to have a pipeline of projects. We have multiple projects with very low capital obligation. So, we’re not obligated to spend on these projects, but it’s optional.”
He notes that the company has been selective, acquiring projects that are still profitable and commercially viable under the new fiscal regime in the United Kingdom.
“We’ve looked for projects that are very profitable and commercially viable,” Paul says.
“We selected these through internal evaluations and competitively bidding with the UK government.”
For the near term, Paul says Ping Petroleum’s primary focus is on the Abu cluster in Malaysia and the Fyne project in the United Kingdom.
While the company plans to invest approximately US$50mil in the Abu cluster over the next 12 months, Paul says about US$10mil to US$15mil will be utilised in the Fyne project, which will tie back into the Anasuria FPSO.
In Malaysia, Tarmizi says, the company is also looking at the Meranti cluster.
“We are going to drill an appraisal well in the next couple of years to further appraise the resources there. With a plan to develop that resource, it is likely to be an integrated oil and gas development,” he says.
Looking ahead, Ping Petroleum remains committed to expanding its operations and optimising its asset base.
The company’s strategy includes focusing on late-life brownfield assets, leveraging its expertise in turning around mid-life producing assets, and exploring opportunities for growth through acquisitions and partnerships.
“We continue to look at assets being marketed, especially brownfield mid-life assets, both in Malaysia and the United Kingdom. Our goal is to deploy our skills as turnaround specialists to maximise the value of these assets,” Tarmizi says.
This approach reflects Ping Petroleum’s commitment to balancing energy production with environmental responsibility.
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