Shell Malaysia makes major oil discovery

Shell Malaysia makes major oil discovery

Associated Press, Kuala Lumpur

Shell Malaysia said it has discovered crude oil near Borneo
island in what a newspaper described on Tuesday as potentially
the country's biggest deepwater oil reserve.

Initial indications showed the oil found off northeastern
Sabah state was of high quality, which is typical of Malaysia's
crude oil grades, the company said in a statement late on Monday.

Drilling at the exploration well was completed in December
last year.

"The priorities are now to appraise the discovery and develop
the field in a timely manner," said Jon Chadwick, Shell
Malaysia's chairman.

The New Straits Times newspaper said it could be the biggest
discovery of crude oil in the area. Shell Malaysia has not yet
revealed the size of its find.

In September, U.S. company Murphy Oil discovered oil off
Sabah. That find accounts for 22 percent of Malaysia's total oil
reserves, the newspaper said.

Shell Malaysia, a unit of Royal Dutch/Shell Group, holds a 40
percent stake in the exploration block where the latest find was
made. U.S.-based ConocoPhillips holds another 40 percent and
Petronas Carigali, the exploration arm of Malaysia's state-owned
Petronas, owns the remaining 20 percent.

Shell Malaysia is this Southeast Asian country's largest
foreign oil investor and also the biggest oil exploration company
in the natural gas-rich areas off the coast of Malaysia's Sabah
and neighboring Sarawak state.

Analysts expected shares of major Malaysian oil-and-gas
companies, such as Crest Petroleum and Scomi Group, to rise
Tuesday following the announcement of the new oil discovery.