Malaysia now has 100 active production sharing contracts (PSCs), a significant achievement and milestone in the country’s oil and gas upstream operation, following the award by PETRONAS of its latest PSC on 11 December.
The PSC, awarded to Salamander Energy Malaysia Limited and PETRONAS Carigali Sdn Bhd (PCSB), was for Block PM322, which is the first exploration acreage located in the Straits of Malacca to have been awarded by PETRONAS since 1992.
Under the terms of the PSC, Salamander Energy Malaysia, a UK-based first-time upstream player in Malaysia, will operate the block with a 85 per cent equity, while partner PETRONAS Carigali owns the remaining 15 per cent interest.
The two parties are committed to drill one exploration well in the block to a minimum depth of 1,400 metres and to acquire and process 600 square kilometres of new 3D seismic data. The minimum financial commitment for the block is US$18 million.
The signing of the PSC took place in Kuala Lumpur where PETRONAS was represented by its Vice President of Petroleum Management Encik Ramlan Abdul Malek. Salamander Energy Malaysia was represented by its Chief Operating Officer Mike Buck while PETRONAS Carigali was represented by Vice President and Chief Executive Officer of PETRONAS Exploration Encik Effendy Cheng Abdullah.
Speaking at the event, Encik Ramlan said, “The signing of the Block PM322 PSC means that Malaysia now has 100 active PSCs, the most it has ever had at any one time since the PSC system was introduced in Malaysia 37 years ago.”
“Considering Malaysia’s ‘matured’ basins, reaching 100 active PSCs is testimony to the country’s successful petroleum resource management as it demonstrates our ability to garner continued interest from oil and gas players,” he said, adding that PETRONAS now has 27 PSC contractors participating in the country’s upstream industry on a variety of fiscal arrangements.
The PSC system in Malaysia was introduced in 1976, two years after the incorporation of PETRONAS. Since then, a total of 151 PSCs have been awarded to oil and gas upstream players.
Other Recent PSC Awards
Prior to the signing of PM322 PSC, PETRONAS recently awarded three other PSCs, respectively for Deepwater Blocks 2F, 3F and 3E.
The PSCs for Deepwater Blocks 2F and 3F were awarded to the partnership of JX Nippon Oil & Gas Exploration Malaysia (40%), PETRONAS Carigali (40%) and GDF Suez E&P Malaysia BV (20%).
Block 2F will be operated by JX Nippon while Block 3F will be operated by PETRONAS Carigali.
For Block 2F, the partners are committed, among others, to drill one wildcat well to a total depth of 2,000 metres and re-process 2,300 sq km of 3D seismic data. The minimum financial commitment for this block is US$32.6 million.
For Block 3F, the partners’ work commitments include the drilling of one wildcat well with a minimum depth of 3,000 metres and to acquire 1,000 sq km and 2,000 line km of 3D and 2D seismic data. Their minimum financial commitment is US$40.3 million
The Deepwater Block 3E PSC was awarded to ConocoPhillips Malaysia and PETRONAS Carigali. ConocoPhillips holds 85% equity and is the operator of the block, with the commitment to drill three wells and reprocess 2,100 sq km and 2,500 line km of 3D and 2D seismic data respectively. The minimum financial commitment for this PSC is US$79.9 million.
Press Release, December 12, 2013