Shell, Mubadala Swap Equity Offshore Malaysia

Shell Malaysia and Mubadala Petroleum today signed a deal to swap stake in two exploration blocks offshore Malaysia.

According to the agreement, Shell will obtain a 20 per cent interest in the Block SK320 while Mubadala Petroleum will take a 20 per cent interest in the deepwater Block SK2B. PETRONAS Carigali Sdn Bhd is a participant in both blocks.

Block SK320 was awarded to Mubadala Petroleum and PETRONAS Carigali in 2010 and contains the M5 discovery. Two further discoveries were made during 2013 within Block SK320 – Pegaga and Sintok. Both are subject to further development studies.

Block 2B is located near to the Block SK320 and was awarded to Shell and PETRONAS Carigali in 2012. Shell is the operator for Block SK2B while Mubadala Petroleum is the operator in Block SK320.

As production sharing contract operator to PETRONAS, Shell is one of the largest gas producers in Malaysia, with operatorship in 13 PSCs and participating interest in 5 other PSCs. Production from these PSCs account for nearly fifty per cent of total Malaysia’s gas production for 2013.

New discoveries

Maurizio La Noce, CEO Mubadala Petroleum, said, “The equity swap agreement is an important step for Mubadala Petroleum’s growth strategy in Malaysia and marks our first partnership in Southeast Asia with Shell, an important player in deepwater exploration.

In a separate statement, Mubadala also added that its current exploration drilling campaign in Block SK320 has yielded two new gas discoveries, Pegaga and Sintok, to add to the existing M5 discovery.

La Noce added that “we need to do further work to determine the full extent and commerciality of those discoveries, but coupled with the new partnership with Shell, we are moving our business in Malaysia in a positive direction.”

Sintok-1 well was drilled to a depth of 2775 meters into the main target reservoir and penetrated a 290 meter gas-bearing carbonate reservoir. Sintok-1 will be plugged and abandoned as planned, after which a third prospect, Sirih, will be drilled, adjacent to Sintok. Further work is required to assess more fully the nature and extent of both discoveries; Mubadala says that additional drilling is already being planned to appraise the extent of the Pegaga discovery.

January 19, 2014

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