New Plan Seeks To Boost Malaysian Gas Output

Additional natural gas reserves stand to be developed off Malaysia (see related story, p. 94). State-owned Petroliam Nasional Bhd. (Petronas) has initiated consolidated development of fields in the South China Sea and shared infrastructure among two key contractors. Exxon Corp. unit Esso Production Malaysia Inc. and partner Petronas Carigali Sdn. Bhd. signed a long-term production-sharing contract with Petronas. Officials said the companies will sell Petronas enough gas to meet about two-thirds

July 21, 1997

3 min read

Additional natural gas reserves stand to be developed off Malaysia (see related story, p. 94).

State-owned Petroliam Nasional Bhd. (Petronas) has initiated consolidated development of fields in the South China Sea and shared infrastructure among two key contractors.

Exxon Corp. unit Esso Production Malaysia Inc. and partner Petronas Carigali Sdn. Bhd. signed a long-term production-sharing contract with Petronas.

Officials said the companies will sell Petronas enough gas to meet about two-thirds of projected demand in peninsular Malaysia for the next 25 years.

Esso and Petronas Carigali hold 50% participating interests each.

What's involved

The contract covers development of natural gas from 15 fields containing estimated reserves of about 12.5 tcf, or roughly 15% of the country's total reserves of 85.1 tcf. Of the 15 fields, six have strictly non-associated gas. The remaining nine are oil fields either with gas caps, or non-associated gas.

Total investment is estimated at close to $5 billion.

The contract includes provisions for integrated development of Angsi oil and gas field. It will be the first large-scale oil and non-associated gas development off peninsular Malaysia (see map).

Engineering work is under way, with first production slated for 2002.

Petronas Carigali will operate Angsi field and nearby platforms; Esso will operate fields around existing hubs at Jerneh and Lawit fields.

Jerneh came onto production in 1992, and Lawit began producing this past April. Esso also will operate in a 1995 joint-venture area.

New platforms and related infrastructure will be installed over the next 15 years, and significant modifications will be made to existing platforms for gas cap production.

The deal calls for Esso to surrender to Petronas all but two of the undeveloped gas fields awarded under a 1990 agreement (OGJ, Aug. 13, 1990, p. 26). Both Esso and Petronas Carigali also must relinquish all undeveloped fields in the PM-5 and PM-8 production-sharing areas.

Gas will be transported via the peninsular gas utilization project, operated by Petronas Gas Bhd., a 745-mile pipeline linking gas processing plants along peninsular Malaysia (OGJ, June 24, 1996, p. 16).

Condensate sales will be made from the Esso-operated Yerengganu crude oil terminal.

Block PM-9 discovery

In a related development, Esso and Petronas Carigali discovered oil on block PM-9. The 3-Irong well, about 130 miles north of Kerteh, off peninsular Malaysia's east coast in the South China Sea, flowed on test at a rate of 5,889 b/d of oil and 3.81 MMcfd of gas. The well was drilled to 6,450 ft total depth to test a Miocene sand on a structure between two producing fields-Irong Barat and Tapis.

Petronas Carigali operates the block and holds a 60% interest; Esso holds the remainder.