Poses risks to biodiversity and communities

COMMENTARY | 15 April 2024

Executive Summary
In late 2023, Petronas announced a new oil and gas exploration project at the Langkasuka basin, located in the northern area of the Straits of Melaka, just 30km from Penang Island and 20km from Langkawi. New O&G exploration not only detracts from Malaysia’s mitigation responsibilities, but also threatens coastal marine biodiversity, livelihoods of fishing communities and local tourism.

Last November, Petronas announced that it has undertaken a new offshore multi-client 2D seismic survey in the northern area of the Straits of Melaka to explore and map the hydrocarbon potential in the open blocks of PM320 and PM321 of the Langkasuka Basin [1]. This survey covers an area of over 38,000 square km with the aim of acquiring approximately 8,000km of new 2D seismic data. According to Petronas, its “recent study of the Langkasuka Basin indicates hydrocarbon potential in the untested deeper pre-Tertiary formation, which prompted for (sic) this seismic survey to be conducted. The first exploration probe is expected in the next three years to test this exciting new geological play.”

As Malaysia suffers from the El Nino-induced heatwave, which is exacerbated by an average rise in global temperatures of 1.2 degrees since pre-industrial times and a continued rise in CO2 emissions driven primarily by fossil fuel combustion, the following four key points should be considered in relation to this development:

New O&G Exploration is Inconsistent with Climate Science
There is a general consensus across all published studies that developing new oil and gas fields is “incompatible” with a 1.5C target [2]. Notably, the Intergovernmental Panel on Climate Change (IPCC) projects that if existing climate policies do not change to reflect the urgency of this threat, including policies related to using gas as a transition fuel, we are on a trajectory for 3.2°C warming by 2100, which is more than double the 1.5C target. This will result in irreversible climate disasters at an unprecedented scale, including uninhabitable temperatures, major cities underwater, widespread water shortages and the extinction of a million species of plants and animals [3].

A United Nations High-Level Expert Group report has warned that “net-zero is entirely incompatible with continued investment in fossil fuels” [4], and that companies cannot claim to be net-zero while continuing to build fossil fuel supply.

Petronas Does not have a Credible Decarbonisation Strategy
Petronas controls the nation’s oil resources and, therefore, will manage the exploration and potential extraction activities at the Langkasuka Basin. There is an absence of a ‘safety net’ for the management of emissions from the perspective of credible corporate climate governance.

In fact, Petronas’ transition and decarbonisation strategies have a track record of performing poorly in accordance with international guidelines. The World Benchmarking Alliance, which scores corporate transition strategies, awarded Petronas’s strategy a rating of 13.5/100 in 2023 [5]. In addition to this, Petronas’s net-zero pathway does not fulfill most of the requirements under the ISO’s Net Zero Guidelines, namely the exclusion of Scope 3 from any decarbonisation targets, an emissions scope which covers the vast majority of an oil and gas operator’s emissions. The Guidelines are based on international consensus over what credible net-zero entails.

Malaysia has a Significant Responsibility to Mitigate Climate Change
It is often argued, especially by the fossil fuel industry in Southeast Asia and local policymakers, that the Global North is largely responsible for climate change mitigation due to the magnitude of its historical and current emissions. From a climate justice perspective, the concept of a ‘fair carbon budget’ underscores “the recognition of the atmosphere as a shared commons, to which all people are entitled to a fair and equitable use.” [6] Each country is allocated a fair share of the remaining carbon budget, taking into account equality, their respective historical responsibilities, capabilities, geographical needs and sovereignty.

According to Fanning and Hickel [7], Malaysia has already exceeded its fair carbon budget based on its historical emissions (2023) [8]. Further, according to the EU’s Emissions Database for Global Atmospheric Research (EDGAR) measuring GHG totals by country, Malaysia was the 28th highest emitting nation in the world in 2022 [9]. To substantiate this, RimbaWatch’s Future Emissions Database [10] finds that the carbon lock-in from fossil fuel extraction projects, the majority of which are in Malaysia, amounts to 9.9 billion tons of CO2e, which is more than 9% of the remaining global GHG budget [11]. Therefore, it is evident that Malaysia’s emissions form a significant contribution to global GHG emissions, both historically and now.

Continued Investments in O&G Represents a Financial Risk to Malaysia
The global energy transition represents significant financial risks to O&G operators. Studies show that half of the world’s fossil fuel assets will be worthless by 2036 under a net zero transition, estimated to leave USD 11 to 14 trillion in stranded assets [12]. The Natural Resource Governance Institute projects that a quarter (or USD 425 billion) of national oil companies’ (NOCs) planned investments will be unprofitable if oil demand falls from the current 100 million barrels a day to 55 million barrels a day by 2050, in line with the International Energy Agency’s Announced Pledges Scenario (APS) [13].

It is also estimated that 25 percent of Petronas’ capital expenditure will not break even in the APS as a share of annual government expenditure [13]. As such, by continuing to invest in the O&G industry, Petronas risks national stability, exposes communities to climate adversities and reaffirms over-reliance on an industry that is fast becoming archaic.

The Langkasuka Basin is in Close Proximity to Penang and Langkawi
According to our estimates, the Langkasuka basin is as close as 30km from Penang Island and 20km from Langkawi. From 2014 to 2022, the Department of Environment reported that Malaysia had faced 130 oil spill cases, averaging at least 14 oil spills a year [14]. The frequency of these incidents point to the threat of exploration and extraction activities in the Langkasuka basin to coastal marine biodiversity, income for fishing communities and the tourism economy. 

  1. Risks to coastal marine biodiversity: Reports have shown that oil spills can remain for years in the sediment and marine environment, causing long-term effects to marine biodiversity. The recovery periods of marine ecosystems affected by oil spills differ: planktons (weeks/months), exposed rocky shores (1-3 years), sheltered rocky shores (1-5 years), saltmarsh (3-5 years), mangroves (10 years or more), coral reefs (10-30 years) [15].
  2. In past oil spill incidents, fishing communities had suffered losses to their weekly incomes and due to damaged fishing equipment. An oil spill in Tanjung Balau had caused the fishing community to lose weekly incomes of RM400-500 and RM8,000 worth of damages to their fish traps [16].

Conclusions
With the above in mind, we urge the prime minister, the Ministry of Natural Resources and Environmental Sustainability and the Ministry of Energy Transition and Water Transformation to work together with Petronas to develop a credible transition strategy based on sound methodologies and in accordance with international best practice on net-zero. This strategy should be committed to full transparency, accountability and a clear pathway towards the complete divestment of all existing and planned fossil fuel projects, including natural gas.

About RimbaWatch
RimbaWatch is a regional, independent watchdog conducting research and analysis on climate-related issues.

For further details on new O&G projects (including their total expected emissions and mortality costs), see our Future Emissions Database at rimbawatchmy.com.

About Greenpeace Malaysia
Greenpeace uses non-violent creative action to pave the way towards a greener, more peaceful world, and to confront the systems that threaten our environment.

Notes to Editor
This press statement accompanies a commentary published on the RimbaWatch website at: https://rimbawatchmy.com/reports

For media enquiries, please contact:
RimbaWatch (Kuala Lumpur) | [email protected] | rimbawatchmy.com

Resources:
1. https://www.petronas.com/media/media-releases/petronas-maps-hydrocarbon-potential-malaysias-langkasuka-basin
2. https://www.carbonbrief.org/new-fossil-fuels-incompatible-with-1-5c-goal-comprehensive-analysis-finds/
3. https://www.ecowatch.com/ipcc-report-climate-change.html
4. https://www.un.org/sites/un2.un.org/files/high-level_expert_group_n7b.pdf
5. https://www.worldbenchmarkingalliance.org/publication/oil-and-gas/rankings/
6. https://www.nature.com/articles/s41893-023-01130-8
7. Authors of a study quantifying the historical responsibility of 168 countries for climate breakdown (or lack thereof), based on excess CO2 emissions beyond equality-based fair shares of global carbon budgets. https://www.nature.com/articles/s41893-023-01130-8
8. ​​https://goodlife.leeds.ac.uk/related-research/atmospheric-appropriation/#MYS
9. https://edgar.jrc.ec.europa.eu/report_2023
10. https://rimbawatchmy.com/futureEmissionsDatabases
11. Assuming a likelihood of 83% to stay under 1.5 °C
12. https://www.nature.com/articles/s41560-021-00934-2
13. https://resourcegovernance.org/sites/default/files/2023-11/Riskier-Bets-Smaller-Pockets-How-National-Oil-Companies-Are-Spending-Public-Money-Amid-the-Energy-Transition.pdf
14. https://link.springer.com/chapter/10.1007/978-3-031-38993-1_22
15.https://www.itopf.org/fileadmin/uploads/itopf/data/Documents/TIPS_TAPS_new/TIP_13_Effects_of_Oil_Pollution_on_the_Marine_Environment.pdf & https://besjournals.onlinelibrary.wiley.com/doi/10.1111/1365-2664.13141
16. https://www.nst.com.my/news/nation/2019/04/481030/fishermen-say-tanjung-balau-oil-spill-worst-they-have-faced