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Malaysia’s Petros dives

into offshore exploration

Sarawak State’s oil company has partnered with Royal Dutch
Shell and Petronas to learn the ropes of offshore exploration

COMMENTARY MALAYSIA’S Sarawak State took another Petronas over how much say Kuching would
step towards greater of control its oil and gas have over upstream projects.
resources this week after securing its first stake It was not until in December 2020 that Sar-
WHAT: in an offshore exploration block. awak announced that it had reached a com-
Petronas has awarded Malaysia’s state-owned Petronas announced mercial agreement with both Kuala Lumpur
shallow-water Block on July 28 that it had awarded offshore Block and Petronas that paved the way for Petros to
SK437 to Shell, Petronas SK437 to a consortium that includes Petroleum manage, control and undertake all of the state’s
Carigali and Petros. Sarawak’s (Petros) wholly owned Petroleum Sar- onshore operations. Petros unveiled last year
awak Exploration and Production (PSEP). plans to auction onshore blocks SK433 and
WHY: The government in Kuching formed Petros SK334, with Malaysian independents Petra
This is Petros’ first in August 2017 to regulate the state’s upstream Energy Development and Uzma Engineering
offshore exploration projects, before amending the Oil Mining Ordi- emerging as winners of the former in June.
acreage and marks nance 1958 (OMO) in July 2018 to enshrine that That triparty agreement also gave Pet-
the next phase of the all developers must secure licences and leases ros equity participation in Petronas’ offshore
company’s growing from the new state oil company. upstream operations as well as additional equity
control over Sarawak’s The Sarawak government has been pushing investments in Malaysia LNG (MLNG) and
resources. for many years to gain a greater share of the prof- MLNG Dua.
its from oil and gas projects within its own bor- Block SK437 marks the first time, however,
WHAT NEXT: ders. Kuching has long argued that the state has that the company is involved in an exploration
Shell is deepening ties not received a large enough share of the profits licence and, as such, the company has taken a
with the country’s latest generated from local projects, underscoring this backseat approach to the development.
state developer, which is point last year when it claimed that Sarawak had Petronas awarded the block to a consortium
eager to boost upstream accounted for around 65% of national gas pro- led by Royal Dutch Shell’s Sarawak Shell Berhad
investment. duction and 30% of the country’s oil production (SSB), which will operate the 2,015-square km
between 2005 and 2015. licence with an 85% stake. Petros and Petronas,
meanwhile, each hold a 7.5% interest and will be
Tough talks carried during the exploration phase.
Following Petros’s creation in 2017, Sarawak The block lies to the south-west of the Cen-
was locked in lengthy and at times heated nego- tral Luconia Province in the Sarawak Basin and
tiations with both the federal government and is located in up to 50 metres of water.

P6 www. NEWSBASE .com Week 30 29•July•2021