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ExxonMobil to boost Tapis field production in Malaysia

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 10 -- ExxonMobil Corp. said its enhanced oil recovery project at Malaysia's Tapis field will start in 2013, with an estimated gross investment of more than $1 billion, according to a senior company executive.

“This latest contract includes commitments to implement an enhanced oil recovery project at the Tapis field and will be the first ever large-scale project of its kind in Malaysia,” said ExxonMobil senior vice-president Andrew Swiger.

“The Tapis project represents yet another major step forward to develop Malaysia's full energy potential,” Swiger told the Asia Oil & Gas Conference.

Tapis field is one of seven mature offshore fields that ExxonMobil (78%) and state-owned Petronas (22%) have agreed to develop as part of a 25-year production-sharing contract that was finalized in June 2009.

Under the agreement, which includes provisions for the deployment of EOR and further drilling to boost output, work will be carried out on all seven fields, including Seligi, Guntong, Tapis, Semangkok, Irong Barat, Tebu, and Palas.

The Tapis oil development, which lies 190 km off Terengganu in 64 m of water, produces an extra-light, low-sulfur crude, and once served as the benchmark for pricing oil cargoes in Australia, Indonesia, and Vietnam.

‘Back to basics’
Swiger’s statement came just days after Petronas Chief Executive Datuk Shamsul Azhar Abbas said the firm will search for more oil and gas reserves in Malaysia at the expense of overseas exploration.

“The way we manage the business has to change. We have to go back to basics. We have to change our behavior, and to do that we have to change our structure,” he said.

Abbas said oil exploration in Malaysia would see Petronas drill deeper for oil and gas in the shallow waters, but that the company also wants to increase the amount of oil it produces out from existing wells.

Shamsul said most of Petronas’ overseas activities are focused on exploration in 30 countries but that the results of such exploration work have not matched expectations.

“The prolonged lack of success in discovering hydrocarbon is costing us a lot of money,” Abbas said, adding that the push now is focused more on Malaysia, with savings from overseas exploration to be spent on domestic production and extracting more from existing wells.

Meanwhile, ConocoPhillips is talking to Petronas to expand its position in the upstream sector there, according to Ryan M Lance, ConocoPhillips’s senior vice-president, exploration and production, international.

“We are certainly looking for opportunities in Malaysia. We are talking to Petronas,” said Lance, who said the firm would “love” to expand its position in Malaysia, especially oil and gas exploration.

Oil, gas production
According to analyst BMI, Malaysia’s oil production looks to stay flat over the coming decade, while production of gas will increase by 60% in the same time period.

“Our forecast for Malaysia’s oil production for the year 2020, of 697,000 b/d, is only slightly higher than our 2010 forecast of 695,000 b/d,” BMI said. “We do, however, expect an increase in gas production from 70 billion cu m (bcm) in 2010 to 110 bcm in 2020.”

Earlier this year, Murphy Oil Corp.’s interests in Blocks L and M off Malaysia were terminated after resolution of a dispute with Brunei over control of the assets.

That agreement ended a dispute that erupted in 2003 when Petronas and Murphy were awarded two offshore leases, SB L and SB M. The blocks overlapped with Brunei's Blocks J and K, which had been awarded to Total SA and Royal Dutch Shell PLC (OGJ Online, Apr. 22, 2010).

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