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Shell and its jv partners PCSB and ConocoPhillips make significant discoveries at Malikai-1

New Straits Times (Malaysia): The question of overlapping claims on two new oil and gas blocks offshore east Sabah does not arise, as the areas are solely within Malaysia’s jurisdiction, Foreign Ministry parliamentary secretary Datuk Zainal Abidin Osman said today.: “On Sept 22, Shell and its joint venture partners PCSB and ConocoPhillips made significant discoveries at Malikai-1 in the Block G exploration well in Sabah.”

Sep 30, 2004

PUTRAJAYA, Wed. – The question of overlapping claims on two new oil and gas blocks offshore east Sabah does not arise, as the areas are solely within Malaysia’s jurisdiction, Foreign Ministry parliamentary secretary Datuk Zainal Abidin Osman said today.

Malaysia’s continental shelf and the Federal territorial parameters map issued in 1979 both showed the country held sovereignty over the ND6 and ND7 blocks.

“Malaysia’s rights over these areas have never been disputed by any country before, as they are clearly ours and there is definitely no overlapping.” The area also contains the Ligitan and Sipadan islands, ruled as belonging to Malaysia by the International Court of Justice after a legal tussle with Indonesia over sovereignty.

Zainal Abidin said Wisma Putra, in the past year, had been aware of Petronas’ seismic survey works in the area.

He said in the spirit of good neighbourliness, Malaysia welcomed talks with Indonesia, if they wanted to.

In a statement today, Petronas president and chief executive officer Tan Sri Hassan Marican confirmed that “we are in the advanced stages of awarding the ultra deepwater blocks, including ND6 and ND7 offshore Sabah, which is within the Malaysian territorial boundary.” “Any dispute with regard to territorial boundaries would be up to the Government to resolve,” Hassan added.

A ministry official said Indonesian national oil company Pertamina’s plan to award exploration contracts at the end of the month in this area would constitute an intrusion if implemented.

Indonesian authorities had reportedly planned to award the contract ahead of Pertamina’s plans to award production sharing contracts (PSC) for exploration in the very deep water of the Sulawesi Sea before the end of the year.

Pertamina had a few months ago called for major international oil and gas companies to bid for the two blocks – Block ND6 and Block ND7 – located between 100km and 150km offshore Tawau.

While industry players had urged that the matter be resolved between the two governments, Wisma Putra said Indonesia did not have any right to disrupt Petronas’ plans to develop the area.

Industry sources had said that Indonesia began negotiations with several companies this month for a direct tender for exploration works in what is known as the East Ambalat block.

Awards are expected at the end of the month.

The East Ambalat block is an extension of the Ambalat block, which incidentally is also said to have encroached on Malaysian territory, specifically Block ND6.

The two Malaysian blocks are located in waters up to 4km deep, also known as ultra-deepwater fields.

Seismic studies have indicated potentially significant gas reserves, arousing the interest of some oil majors.

The venture in east Sabah follows a spate of discoveries at depths down to 2km in the western waters of Sabah.

This would be Petronas’ first exploration for oil and gas in eastern Sabah and probably the world’s first attempt to drill in waters more than 4,000 metres deep.

Currently, deepwater explorations are being carried out in western Sabah, with the deepest at a depth of 2,700m.

In June, Petronas was said to have started negotiating with several international petroleum companies for the possible award of PSCs to explore for oil and gas in ultra-deepwater production fields.

Petronas was said to have identified six new deepwater and ultra- deepwater blocks offshore Sabah and Sarawak.

Petronas and its partners, through the PSCs, recently made several new discoveries in deepwater fields.

The first such discovery, this year, was achieved by a Shell-PCSB- Conoco-Phillips joint venture at the Gemusut-1 well in Block J offshore Sabah.

This was followed by the discoveries of Murphy Oil and PCSB in June in Kakap, in Block K.

On Sept 22, Shell and its joint venture partners PCSB and ConocoPhillips made significant discoveries at Malikai-1 in the Block G exploration well in Sabah.

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