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.