SK Earthon & Petronas: A Historic Partnership

South Korea and Malaysia share a long history of collaboration, and the energy sector is no exception. In the latest development, South Korea’s SK Earthon has secured an 85% stake in Malaysia’s Ketapu Cluster production sharing contract (PSC), marking another milestone in their joint energy ventures. But what exactly is a PSC? A production sharing contract is an agreement that allows a company to explore and extract resources like oil and gas in exchange for a share of the production or revenues to the issuing authority. This partnership was made possible by Petronas, Malaysia’s national oil company, which awarded the PSC as part of its Malaysia Bid Round+ (MBR+), an initiative aimed at attracting international investors to explore Malaysia’s resources. Their local partner, PSEP, a subsidiary of Sarawak’s state-owned Petros, holds the remaining 15%. Sarawak, a Malaysian state on Borneo Island, manages its oil and gas assets through Petros. Under the contract, SK Earthon has a 4-year development period, where they will conduct feasibility studies and develop the necessary infrastructure, with production set to begin by 2031.

Untapped Potential in the Ketapu Cluster

The Ketapu Cluster is an oil and gas field located off the coast of Sarawak, East Malaysia. Despite discoveries in the region, its resources have remained largely unexplored. Now, SK Earthon is taking the lead, with plans to conduct a feasibility study by 2025. The PSC offers a 20-year production term, giving SK Earthon the time and space to fully develop and extract these resources. 

Why This Deal Matters

SK Earthon’s current daily production of 57,000 barrels of oil equivalent, across 10 blocks, is set to grow with the development of the Ketapu Cluster. The field’s untapped resources provide a clear path for increasing output and expanding their footprint in Malaysia’s offshore sector. What makes this even more compelling is the strategic proximity to Block SK 427, which allows for shared infrastructure and cost-saving opportunities — a rare advantage in offshore projects. With the feasibility study scheduled for 2025, SK Earthon is positioning itself to capitalise on this opportunity efficiently. This deal represents a calculated move to drive both production and profitability forward.