Sarawak Shell Bhd. has signed a production-sharing contract with Malay- sian state firm Petroliam Nasional Bhd. (Petronas) to develop five gas fields off Sarawak.
Shell will take on Petronas upstream unit Petronas Carigali Sdn. Bhd. as a 50-50 partner in the $5.6 billion venture.
Shell said the agreement calls for development of five central Luconia area gas fields, E11, F23, F6, F13, and E8 to ensure continued supply to the Malaysia Liquefied Natural Gas (MLNG) plant at Bintulu, Sarawak.
The partners will initially develop E8 and F13 gas fields and install compression facilities in the five fields as required, to ensure the MLNG plant continues to receive gas at its current level of about 1.2 bcfd.
Shell estimates total capital investment at $2.4 billion and operating costs at $3.2 billion. The two partners will share costs and profits equally.
Prior to the new deal, Shell held a 100% interest since 1976 in a PSC covering the five fields. Shell will continue to operate the fields under a new contract for Apr. 1, 1997-Dec. 31, 2020.
MLNG is one of two LNG plants in Malaysia, with a combined capacity of almost 16 million metric tons/year. Malaysia is planning a third LNG export project with capacity of almost 7 million tons/year on the strength of new interest in long-term LNG supplies from China, India, Philippines, and Thailand as well as from traditional buyers Japan and Taiwan.
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