KUALA LUMPUR (March 23): Petroliam Nasional Bhd (Petronas) has signed production sharing contracts (PSCs) for five offshore exploration blocks, which would attract a capital commitment of about RM600 million in exploration activities in Malaysia.

In a statement on Wednesday (March 23), the national oil company said the blocks comprise SB412, 2W and X located off the coast of Sabah, and SK439/SK440 located off the coast of Sarawak.

Block SB412 in Sabah was signed between Petronas, PTTEP HK Offshore Ltd and SapuraOMV Upstream (M) Sdn Bhd, while the PSCs for ultra-deepwater Blocks 2W and X were signed between Petronas, Sabah Shell Petroleum Company Ltd (SSPC), Shell Sabah Selatan Sdn Bhd (SSS) and Petronas Carigali Sdn Bhd (PCSB). 

Meanwhile, the PSC for Sarawak’s Block SK439/SK440 was signed between Petronas, Sarawak Shell Bhd (SSB) and Petroleum Sarawak Exploration & Production Sdn Bhd (PSEP). 

After signing the PSCs on behalf of the company, Petronas senior vice president of Malaysia Petroleum Management (MPM) Mohamed Firouz Asnan said this will reflect the attractiveness of the country’s hydrocarbon resources potential.

“The reduction in global exploration drilling over the past two years has pressured the industry to resolve current supply shortages. As global economies have started to recover post-pandemic, the industry needs to ensure exploration activities continue to sustain production.

“Petronas is committed to reducing carbon emissions from our operations with technologies such as carbon capture and storage. We look forward to working together with our partners to provide safe and reliable energy to the market,” he said.

The PSC signing ceremony took place on Tuesday (March 22) at the Kuala Lumpur Convention Centre during the Malaysia Bid Round (MBR) 2021.

The MBR is an annual Malaysia licensing round hosted by MPM with diverse upstream opportunities, including exploration acreages, discovered resource opportunities and late life producing assets.

The MBR 2022, themed “Your Advantaged Energy is Here”, was launched on Jan 27, offering 14 exploration blocks, six clusters of Discovered Resource Opportunities and one Late Life Asset cluster.

Petronas, through MPM, manages petroleum arrangements in Malaysia and provides stewardship on upstream petroleum activities.

In a separate statement, Shell said SSPC, SSS and SSB have signed three PSCs with Petronas to explore oil and gas (O&G) offshore Sabah and Sarawak. 

Shell said SSPC and SSB will operate these exploration initiatives, with these three PSCs comprising exploration of blocks SK439/SK440 in shallow water, off the coast of Sarawak and exploration of blocks SB-2W and SB-X in deep water, off the coast of Sabah. 

Shell executive vice president for conventional O&G upstream Peter Costello said the signing of these PSCs marks another growth milestone for Shell in Malaysia. 

“Our long partnership with Petronas in Malaysia continues, as together we seek to provide the energy of today while funding the energy of tomorrow. I look forward to further successful collaboration on growing a sustainable energy industry in Malaysia,” he said. 

Shell Malaysia chairman and senior vice president upstream Malaysia Ivan Tan signed the agreement on behalf of Shell. 

At the same ceremony, Shell also signed joint operating agreements with its co-venturer PCSB for the deep water offshore blocks SB-2W and SB-X and separately with PSEP for the SK439/SK440 block. 

Apart from securing new exploration PSCs, Shell said it continues to invest in its existing fields in Malaysia. 

According to Shell, SSPC, the operator of the Gumusut-Kakap semi-submersible floating production system (GK-Semi FPS) located offshore Sabah, has commenced work on Phase 3 of the Gumusut-Kakap development, with the final investment decision taken in August 2020. 

Shell noted Phase 3 involves the drilling of a four well tie back to the GK-Semi FPS, whereby the project, which involves the drilling of two producer wells and two water injection wells, is expected to achieve first oil this year.

“The signing of these PSCs, together with the commencement of Phase 3 of the Gumusut-Kakap development, demonstrate Shell’s continued commitment to the country and we will work to deliver these projects in a safe and responsible manner," said Tan.