According to the Oil & Gas Journal (OGJ), Malaysia held proven oil reserves of 4 billion barrels as of January 2009. Nearly all of Malaysia's oil comes from offshore fields. The continental shelf is divided into 3 producing basins: the Malay basin in the west and the Sarawak and Sabah basins in the east. Most of the country’s oil reserves are located in the Malay basin and tend to be of high quality. Malaysia’s benchmark crude oil, Tapis Blend, is very light and sweet with an API gravity of 44° and sulfur content of 0.08 percent by weight. More than half of total Malaysian oil production comes from the Tapis field.

Malaysia’s national oil company, Petroleam Nasional Berhad (Petronas), dominates upstream and downstream activities in the country’s oil sector. Petronas is the only remaining wholly state-owned enterprise in Malaysia and is the single largest contributor of government revenues. Petronas holds exclusive ownership rights to all exploration and production projects in Malaysia, and all foreign and private companies must operate through production sharing contracts (PSCs) with Petronas. ExxonMobil (through its local subsidiary Esso Production Malaysia Inc.) is the largest foreign oil company by production volume, and there are numerous other foreign companies operating in Malaysia via PSCs, including Shell, Chevron, and BP.

All energy policy in Malaysia is crafted and overseen by the Economic Planning Unit (EPU) and the Implementation and Coordination Unit (ICU), which report directly to the Prime Minister. The Ministry of Energy, Water, and Communications regulates the hydrocarbon and electricity sectors, although it does not have policymaking powers.

Total oil production in 2008 was 727,000 barrels per day (bbl/d). During 2008, Malaysia consumed an estimated 547,000 bbl/d, and had net exports of about 180,000 bbl/d. Petronas and its various PSC partners are most active exploring offshore areas. Since 2002, the focus has been on deepwater fields on the eastern continental shelf that pose high operating costs and require substantial technical expertise. Petronas announced in January 2009 that 7 new oil fields had come online in 2008, making for a total of 68 producing oil fields.

New oil production projects in the planning or construction phase include:

The Gumusat/Kakap project, located offshore Sabah in 3,937 feet of deep water, will include the regions' first deepwater floating production system with processing capacity of 150,000 bbl/d. from 19 subsea wells. The system will be connected via pipelines to a new oil and gas terminal to be built in Kimanis, Sabah. In March 2009, it was reported that the engineering contract was awarded and that the offshore installation will begin in 2010. Shell is the operator, holding 33 percent interest; ConocoPhillips also holds 33 percent interest, Petronas has 20 percent and Murphy Oil has 14 percent.

Shell is also the operator at the Malikai oil field with 35 percent interest, in partnership with ConocoPhillips at 35 percent and Petronas with 30 percent. The field was discovered in 2004 at 1,854 feet subsea offshore Sabah. In August 2009 Shell invited bids for engineering and design services. Malakai is expected to come online in 2012 with production of up to 150,000 bbl/d.

In March 2009, the North Fields development, located offshore Malaysia near Vietnam, reportedly began producing oil. The North Field is expected to produce between 40,000 and 50,000 bbl/d by early 2010. Talisman Energy (Canada), the operator, has plans to drill 16 development wells in 2009 and another 13 in 2010.

Brunei and Malaysia signed an agreement in March 2009 to settle their maritime territorial dispute that has prevented exploration of the rich offshore oil reserves off Borneo for the past 6 years. Both countries are expected to cooperate on the development of the sites but no timeframe was given.

According to OGJ, Malaysia had about 515,000 bbl/d of refining capacity at six facilities as of January 2009. Petronas operates three refineries (259,000 bbl/d total capacity), while Shell operates two plants (170,000 bbl/d total capacity), and ExxonMobil operates one (86,000 bbl/d). Malaysia invested heavily in refining activities during the last two decades, and is now able to meet most of the country’s demand for petroleum products domestically, after relying on the refining industry in Singapore for many years.