Shell targets higher Sabah output as Malikai expansion moves into execution

Shell has taken the final investment decision for the third phase of the Malikai deepwater development offshore Sabah, with four new production wells expected to lift output by 60% to about 40,000 barrels per day from 2028. The project strengthens Malaysia’s offshore production base and creates additional demand across oilfield services and marine infrastructure.

Shell has approved the third development phase of the Malikai deepwater oil project offshore Sabah, moving the expansion from planning into execution. According to the company’s official announcement, Sabah Shell Petroleum Company Ltd has taken the final investment decision for four additional oil-producing wells, with production targeted to start in the third quarter of 2028.

The expansion is expected to raise Malikai’s production capacity from about 25,000 barrels per day to approximately 40,000 barrels per day, representing an increase of around 60%. The additional wells are intended to improve recovery from the field and extend the contribution of the offshore asset to Malaysia’s upstream production base.

Malikai is located about 100 kilometres offshore Sabah in water depths of roughly 500 metres. The development began production in 2016 and uses a tension-leg platform, making it a significant component of Malaysia’s deepwater oil infrastructure. Phase 3 will use the same single-combo-riser technology deployed in earlier stages, allowing the operator to build on existing development and production infrastructure rather than establishing an entirely new offshore system.

The project is particularly relevant to Malaysia's offshore services ecosystem. Additional drilling and production activity is expected to support demand for subsea equipment, drilling services, offshore logistics, engineering, fabrication and maintenance. Local contractors and specialist suppliers could therefore see opportunities as the project advances toward the 2028 production target.

Malikai is operated by Sabah Shell Petroleum Company, with Shell Sabah Selatan Sdn. Bhd. holding a combined 35% interest, ConocoPhillips Sabah Ltd. holding 35% and PETRONAS Carigali Sdn. Bhd. holding 30%. The ownership structure brings together international upstream expertise and Malaysia’s national oil company, while keeping the project within the country's broader petroleum development framework.

For Malaysia, the investment provides additional domestic oil production capacity at a time when maintaining mature-field output increasingly depends on enhanced recovery and new offshore developments. It also reinforces Sabah's role in the country's deepwater petroleum industry and supports continued activity around offshore energy infrastructure.

For investors and suppliers, the final investment decision provides greater visibility on project execution and procurement requirements through 2028. However, expected production remains subject to drilling performance, reservoir outcomes, offshore execution and broader oil-market conditions. The project's economics will consequently remain sensitive to crude prices and development costs.

Shell is a global integrated energy company with upstream operations spanning exploration, development and production alongside other energy businesses. In Malaysia, the company has operated upstream assets for decades and also operates the Gumusut-Kakap-Geronggong-Jagus East deepwater development, which was producing about 76,000 barrels of oil per day on average at the time of the announcement.