Petroleum Nasional Bhd. will assign operatorship of the Kinabalu oil fields offshore Sabah at the end of 2012 to a combine of Talisman Malaysia Ltd. and Petronas Carigali Sdn. Bhd., who will invest more than $1 billion on production and enhanced oil recovery.
A production-sharing contract with current operator Shell expires in late December, and a new one will be signed that gives Talisman 60% interest and Petronas Carigali 40%.
The mature Kinabalu Main, Kinabalu East, and Kinabalu Far East fields have "significant development upside," Talisman said without giving figures. The PSC is adjacent to the Talisman-operated Sabah exploration block.
Talisman said the agreement is the first of a new "progressive volume-based" PSC to be awarded by Petronas that was specifically designed to incentivize contractors to improve oil recovery and increase production from mature oil fields.