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Nippon Oil To Start LNG Production in Sarawak, Malaysia

THE WALL STREET JOURNAL: Nippon Oil To Start LNG Production in Sarawak, Malaysia

“Shell Malaysia, a unit of Royal Dutch/Shell Group (RD) is the main project operator.”

DOW JONES NEWSWIRES

Posted 7 Sept 04

TOKYO — Japan’s Nippon Oil Corp. (5001.TO) said Monday its oil and gas exploration unit started in late August commercial production of natural gas at the Jintan offshore gas field in Malaysia.

August 31, Nippon Oil Exploration (Sarawak) Ltd. started commercial gas output at the field and will deliver natural gas via a pipeline to a liquefied natural gas plant in Bintulu, Nippon Oil said in a statement.

Shell Malaysia, a unit of Royal Dutch/Shell Group (RD) is the main project operator. It holds a 37.5% interest in the Jintan gas field, which is located in the SK-8 block offshore Sarawak, East Malaysia, while Nippon Oil owns a 37.5% stake and Petronas Carigali holds 25%.

Nippon Oil estimates the maximum gas production of the Jintan field is 14 million cubic meters a day, equivalent to 3.2 million metric tons a year of LNG.

Production at the Jintan field began after Nippon Oil Exploration Sarawak in June began commercial production at the Serai gas field in the SK-8 block.

In November last year, Nippon Oil Exploration Malaysia, another Nippon Oil unit, started production at the Helang gas field in the SK-10 block, Malaysia.

The LNG plants in Bintulu are owned by Malaysia LNG Tiga Sdn. Bhd., a joint venture led by Malaysia’s state-run Petronas. Nippon Oil holds a 10% equity stake in the joint venture. Malaysia LNG Tiga has two LNG plants in Bintulu with a combined capacity of 6.8 million tons/year.

“Half of it (6.8 million tons of LNG output) will go to Japan,” Makoto Koseki, general manager of the gas business department at Nippon Oil said.

Malaysia LNG Tiga started in the fiscal year ending March next year to supply a maximum of 1.6 million tons/year of LNG to three Japanese gas utilities, Tokyo Gas Co. (9531.TO), Osaka Gas Co. (9532.TO), and Toho Gas Co. (9533.TO), under 20-year long-term supply contracts.

In April 2005, Japan’s Tohoku Electric Power Co. (9506.TO) will start receiving 900,000 tons/year of LNG from Malaysia LNG Tiga over 20 years.

Japan annually imports about 55 million tons of LNG.

-By Shigeru Sato, Dow Jones Newswires; 813-5255-2944; [email protected]

-Edited by Bennett Richardson and Shawn Schroter

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