Malaysian firms eye Uganda’s oil fields amid shrinking domestic reserves

[MALAYSIA] Malaysian companies have been invited to compete for unexplored petroleum fields in Uganda, as the Southeast Asian nation’s oil and gas sector faces the challenge of rapidly depleting resources.

Uganda's oil industry has garnered significant attention in recent years due to substantial discoveries in the Albertine Graben region, which is estimated to contain more than 6.5 billion barrels of crude oil. With production set to begin by 2025, the East African country is positioning itself as a prominent player in the global energy market. For Malaysian firms, this represents a strategic opportunity to secure long-term reserves as domestic output continues to decline.

The oil and gas sector plays a vital role in Malaysia's economy, contributing approximately 20 percent of the nation’s 1.9 trillion ringgit (US$432 billion) gross domestic product.

Experts highlight that Petronas, Malaysia’s state-owned energy giant, has been proactively diversifying its portfolio by investing in international projects spanning Africa to South America. Expanding into Uganda fits well with this strategy, allowing Malaysian companies to leverage their expertise in deepwater and onshore exploration while reducing the risks associated with over-reliance on domestic reserves.

However, the government has cautioned that Malaysia's oil reserves could be depleted by 2038, with production from the country’s peninsular oilfields having already dropped to 350,000 barrels per day last year—half of what it was a decade ago.

The decline in output has sparked calls for a greater focus on renewable energy investment, yet hydrocarbons continue to serve as a critical economic driver in the short term. Uganda's untapped oil fields offer a promising alternative, although challenges such as infrastructure limitations and regional geopolitical risks may present obstacles for foreign investors.

Furthermore, environmental concerns related to Uganda’s oil projects, including the controversial East African Crude Oil Pipeline, have attracted criticism from activists. Malaysian firms entering the Ugandan market will likely face the need to navigate strict environmental, social, and governance (ESG) standards to meet global sustainability expectations while pursuing profitable opportunities.