Energy stocks to watch: Eni and PETRONAS to launch JV to dominate LNG in Southeast Asia

Eni S.p.A. and Petroliam Nasional Berhad (PETRONAS) have inked an exclusive Memorandum of Understanding (MoU) to explore the creation of a joint venture (JV) holding company that will oversee selected upstream assets in Indonesia and Malaysia. This strategic collaboration is expected to strengthen both companies’ positions in the region by consolidating key oil and gas reserves while driving new gas development projects that align with evolving energy transition goals.

The proposed joint venture will integrate approximately 3 billion barrels of oil equivalent (boe) in reserves, with the potential to expand exploration activities and unlock an additional 10 billion boe in resources. Over the medium term, the venture aims to sustain a production level of 500,000 barrels of oil equivalent per day (kboepd), reinforcing its role as a significant player in the regional energy landscape.

As Southeast Asia’s demand for liquefied natural gas (LNG) and domestic gas continues to grow, this partnership is positioned to capitalise on market dynamics while fostering innovation in upstream asset management and gas infrastructure development.

What are the key objectives of the Eni-PETRONAS partnership?

A central focus of the joint venture will be investing in new gas development projects, which aligns with both companies’ strategic commitments to the energy transition. By prioritising gas as a critical component of future energy security, Eni and PETRONAS seek to meet increasing regional demand while supporting low-carbon energy solutions.

Beyond gas expansion, the partnership is designed to ensure operational stability for existing assets in Malaysia while facilitating the timely development of new projects in Indonesia. A detailed business strategy will be developed to optimise exploration, production efficiency, and portfolio growth opportunities.

While assets will retain their current operational structures, the new entity will uphold rigorous health, safety, and environmental (HSE) standards to ensure compliance with sustainability commitments. Leveraging Eni’s global expertise in exploration and PETRONAS’s established presence in Southeast Asia, the joint venture aims to create an agile and financially robust company capable of raising independent external financing for future investments.

How will this joint venture strengthen LNG development in Southeast Asia?

The formation of this joint venture is expected to significantly impact Southeast Asia’s LNG industry, positioning the new entity as a major LNG player in Indonesia and Malaysia. By consolidating upstream assets and expanding gas infrastructure, the collaboration will play a crucial role in stabilising regional gas supply while contributing to long-term energy security.

Industry analysts suggest that this move could establish a new regional energy powerhouse, combining Eni’s deepwater exploration capabilities with PETRONAS’s operational expertise in gas markets. This consolidation is anticipated to unlock high-value exploration opportunities, accelerate liquefied natural gas (LNG) production growth, and support new gas infrastructure projects.

Additionally, by prioritising low-carbon energy investments, the joint venture aligns with broader global decarbonisation efforts while ensuring the sustainability of natural gas as a transition fuel.

What are the financial implications of this collaboration?

The announcement of this partnership comes at a time when global oil and gas markets remain volatile, with energy companies adapting to fluctuating prices and evolving regulatory landscapes. Eni recently reported a 45% year-on-year decline in net profit for 2024, amounting to €2.64 billion, down from €4.77 billion in 2023. This drop was attributed primarily to weaker Brent crude oil prices.

Despite this decline, Eni’s hydrocarbon production increased slightly, reaching 1.71 million barrels of oil equivalent per day in 2024, compared to 1.66 million boe per day in 2023. Analysts believe that the partnership with PETRONAS could help enhance operational efficiencies while providing a stable platform for long-term asset growth.

As of February 28, 2025, Eni’s stock on the New York Stock Exchange stood at $28.97, reflecting a 0.89% decrease from the previous close. The company’s stock has experienced fluctuations over the past year, trading between $26.12 and $33.78, reflecting broader industry trends.

PETRONAS, as a state-owned entity, does not trade publicly, but the collaboration is expected to strengthen its long-term energy strategy, particularly in relation to gas infrastructure expansion and international partnerships.

What are the regulatory considerations for the Eni-PETRONAS joint venture?

The successful implementation of this joint venture remains subject to governmental, regulatory, and partner approvals in both Indonesia and Malaysia. Eni and PETRONAS have formally notified their respective governments, signalling their commitment to transparency and compliance.

While regulatory hurdles could influence the timeline of the transaction, both companies have expressed confidence in securing the necessary approvals. Given the strategic importance of natural gas in Southeast Asia, industry observers anticipate favourable regulatory treatment, particularly as regional governments prioritise energy security and sustainable development.

As market conditions evolve, the joint venture’s ability to navigate regulatory landscapes and align with national energy policies will be critical to its long-term success.

What does this mean for the future of energy investments in Southeast Asia?

The Eni-PETRONAS partnership underscores a broader industry trend of consolidation and collaboration as energy companies adapt to the complexities of the global energy transition. By pooling resources and leveraging synergistic capabilities, this joint venture has the potential to reshape the upstream energy landscape in Indonesia and Malaysia.

If successfully executed, the partnership could encourage further investment in regional energy infrastructure, attract new capital into Southeast Asia’s LNG market, and contribute to a more resilient and diversified energy sector.

The industry will closely monitor developments in the coming months, particularly as both companies finalise business strategies and pursue regulatory approvals. With its emphasis on gas development, LNG production, and sustainability, the joint venture is poised to play a pivotal role in shaping the future of energy in Southeast Asia.