Petronas ties up with Esso for new gas contract
Petronas ties up with Esso for new gas contract
KUALA LUMPUR (AFP): A unit of Malaysia's national oil company Petroliam Nasional Bhd. (Petronas), Petronas Carigali, yesterday sealed a gas production sharing contract with Esso Production Malaysia Inc.
Visiting Exxon Corp. chairman Lee Raymond said the contract, effective next January, would cover development of natural gas from 15 fields under Esso and Petronas Carigali.
Each would hold a 50 percent interest under the production sharing contract (PSC), which would also provide for the sale of gas produced to Petronas, Raymond said.
"New platforms and associated infrastructure will be installed over the next 15 years to develop gas resources included the new PSC," Raymond told reporters.
"Significant modications will also be made to existing operating platforms to provide for gas cap production. We project total investment to be almost 12 billion ringgit (US$4.8 billion)," he said.
The contract would also involve the integrated development of the Angsi oil and gas field, the first large scale combined oil and non-associated gas development to be installed offshore peninsular Malaysia.
"Engineering work on this field will begin immediately, with first production scheduled in 2002," Raymond added.
Petronas president and chief executive Hassan Marican said the agreement would consolidate the development of offshore gas fields in Malaysia presently under both Esso and Petronas Carigali.
The agreement would secure long-term gas supply to the Peninsular Gas Utilisation project, which provides the pipeline infrastructure for gas supply to refueling outlets in rural areas.
The multi-phased project, developed by Petronas, comprises 1,200-kilometer (745-mile) of pipeline linking all its processing plants which spans the length of peninsular Malaysia.
Hassan said the production sharing contract was aimed at optimizing cost and enhance operational efficiency through the sharing of infrastructure, and would allow Petronas to meet rising gas demand in Malaysia.
Petronas would award selected gas fields and reservoirs and its gas-cap fields to the two contractors. Esso is to operate gas facilities in the northern region while Petronas Carigali would handle the southern region.
Esso is also to surrender to Petronas all but two of the undeveloped gas fields awarded to the company under a 1990 agreement.
Hassan said the estimated gas reserves in the fields stand at about 12.5 trillion standard cubic feet, of the country's 85.1 trillion standard cubic feet of natural gas reserves.
Combined sales from the new contract and the 1990 agreement with Esso are expected to meet two-thirds of the projected gas demand in Malaysia for the next 25 years, he said.
Earlier, Exxon's Raymond said both Esso and Petronas Carigali produce more than 400,000 barrels of oil from their offshore joint venture operations, accounting for more than half of the nation's output.
The two companies were also supplying the entire demand of more than 1,300 million cubic feet of gas to Malaysia and Singapore, he said.
Esso earlier this year signed two new contracts with Petronas Carigali to explore oil fields in the eastern state of Sabah on Borneo island after an absence of 11 years.
Malaysia produces 630,000 barrels of oil a day, excluding condensates and 3.4 billion standard cubic feet of natural gas, officials said.