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Business Times (Malaysia): Shell to dig more wells to boost gas supply

ROYAL Dutch Shell plc, Malaysia’s biggest operator of gas fields, said it will drill in deepwaters and rejuvenate existing areas to help the nation meet its liquefied natural gas (LNG) export commitments.

Shell may decide this year to tap Gemusut, a field off Sabah, said Wee Yiaw Hin, head of Shell’s exploration and production unit in Malaysia. The company will dig more wells in an area off Sarawak state in waters as deep as 1,500m, he said.

“Malaysia’s deepwater areas have potential,” Wee said “We will develop new fields to meet supplies to the LNG plant.”

Malaysia, which vies with Indonesia to be the world’s second-largest LNG producer, has encouraged explorers to make discoveries after gas production fell in 2006 for the first time in seven years. Dwindling reserves prompted Shell, state- run Petroliam Nasional Bhd (Petronas) and Murphy Oil Corp to drill deeper off the coast of Sabah and Sarawak.

Gemusut will be the second deepwater area in Malaysia, after Murphy Oil’s Kikeh, an area off Sabah that will begin production in 2008, Petronas said on its website.

Malaysia’s LNG exports dropped 1.9 per cent to 21.5 million tonnes last year. Areas off Sarawak’s coast supply natural gas to Petronas LNG complex in Bintulu, among the world’s biggest. Malaysia has the second-biggest gas reserves in South-East Asia.

Shell’s gas production in Malaysia that was available for sale rose 11 per cent to 956 million cubic feet a day last year, accounting for 11 per cent of its global gas output, according to the company’s 2006 annual report.

Shell supplies more than 92 per cent of its gas output in Malaysia to the 23 million ton-a-year LNG production plant in Bintulu, the report said. – Bloomberg

March 31 2007

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