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Oil flow from Malaysian block delayed again

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 22 -- Start of production at Malaysia’s offshore Block SK-305 will be delayed again by technical problems, said an official of Indonesia’s state-owned PT Pertamina, which holds a minority stake in the development.

“There have been a number of problems with the production facility, but oil should start to flow early in December,” said Pertamina Pres. Director Karen Agustiawan, adding output would initially reach 7,500 b/d at the block off Sarawak.

Just days earlier Karen had said production would begin in November and initially reach 7,000 b/d.

Regarding Karen’s announcement, analyst IHS Global Insight said, “The SK-305 Block was supposed to be producing 6,000 b/d of oil this month, but the delays in start-up to December will undermine Pertamina's target of boosting production by 14% between 2008 and 2009 to 171,900 b/d.”

In July, reports emerged that UMW Holdings Bhd.’s $170 million contract to provide a jack up rig for exploration on Block SK-305 had been cancelled.

In an announcement to Bursa Malaysia, UMW said PCPP Operating Co. Sdn. Bhd., a joint venture between Petronas Carigali Sdn. Bhd., Petrovietnam, and Pertamina, would not implement its exploration and development drilling program in Block SK 305. According to UMW, PCPP gave no reason for the cancellation.

Block SK-305 is 40% owned by Petronas, 30% by PetroVietnam Investment & Development Co., and 30% by Pertamina.

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