Petronas, Partners to Spend $5.05B to Develop Gas Offshore Malaysia

- Petronas, Partners to Spend $5.05B to Develop Gas Offshore Malaysia

Tuesday, August 23, 2011
Dow Jones Newswires
KUALA LUMPUR
by Ankur Relia

Malaysian state-owned oil and gas producer Petroliam Nasional Bhd. (Petronas) said Tuesday that it plans to spend MYR15 billion ($5.05 billion) with partners to develop marginal gas fields offshore Malaysia to meet growing demand in the country.

The project will likely encourage more investment in exploration activities that could lead to sizable discoveries offshore peninsular Malaysia, where subsidized prices have increased gas demand by 30% in recent years but have capped exploration and development.

"The development of the North Malay Basin project follows the recently introduced incentives by the government, particularly for the development of marginal fields, high [carbon dioxide] gas fields and fields located in high-pressure, high-temperature conditions," Petronas said in a statement.

It said a gradual revision of domestic gas prices also makes the project "more economically feasible."

The government said in May that it plans to raise the price of gas charged to the power sector by MYR3.00 per million British thermal units every six months, and expects the gas to be sold at market prices by 2016. It raised the price of gas for the power sector to MYR13.70 per mmbtu from MYR10.70 from June 1.

Demand for gas has increased by over 30% since prices were regulated in 1997 to keep them below market levels, Petronas said. However this has made investment less profitable, resulting in low levels of exploration and production activity, it said.

The North Malay Basin project comprises nine gas fields located within Blocks PM301 and PM302 and in the Bergading contract area about 300 kilometers off the coast, and includes a 200-kilometer pipeline from the fields to the state of Terengganu, the company said.

Petronas expects the first delivery of 100 million standard cubic feet of gas per day by early 2013, increasing production to 250 mmscf/d by 2015.

Petronas, Malaysia's only Fortune 500 company and the country's most profitable firm, didn't specify the partners it will be working with.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Petronas Enters SFRSC for Balai Cluster Development Offshore Malaysia

- Petronas Enters SFRSC for Balai Cluster Development Offshore Malaysia

Wednesday, August 17, 2011
Roc Oil Co. Ltd.

Petroliam Nasional Berhad (Petronas) has entered into a Small Field Risk Service Contract ("SFRSC") for the pre-development and development of the Balai Cluster Fields, located offshore Sarawak, with a contractor group comprising Roc Oil Malaysia (Holdings) Sdn Bhd, a wholly owned subsidiary of ROC, Dialog D & P Sdn Bhd, a wholly owned subsidiary of Dialog Group Bhd ("DIALOG Group") and Petronas Carigali Sdn Bhd ("Petronas Carigali"). Participating interests in the contractor group are ROC 48%, DIALOG Group 32% and Petronas Carigali 20%. ROC, Dialog and Petronas Carigali intend to form an incorporated joint venture company ("JVC") to manage the SFRSC.

Balai Cluster Fields

The Balai Cluster comprises a cluster of marginal oil and gas fields in the areas around the Balai and West Acis discoveries, which are located offshore Sarawak in water depths of approximately 60 meters.

Small Field Risk Service Contracts

A Risk Service Contract is a new petroleum arrangement Petronas is implementing in Malaysia. This model strikes a balance in sharing risks with fair returns for development and production of discovered marginal fields. In this arrangement, Petronas is the project owner while the contractor is the service provider. Upfront investment of the capital will be contributed by the contractors. The contractor group shall be compensated accordingly with reimbursement of costs plus a remuneration fee for services rendered. The remuneration fee is based on oil and gas production, as well as the contractor group meeting key performance indicators. Payment to contractors shall commence upon first production and be paid throughout the duration of the contract. The SFRSC contract duration is for 15 years.

Planned Activity

The Balai Cluster SFRSC has two distinct phases. The pre-development phase is scheduled to commence in 2H 2011 and is expected to take up to 18 months. Pre-development activities are planned to include geological and geophysical works, the drilling and testing of appraisal wells and the procurement of related facilities and equipment. The total cost of the pre-development phase is estimated to be between US $200-250 million.

ROC presently considers that future cashflows, the existing debt facility, as well as potential project financing through the JVC will adequately fund the capital costs associated with the pre-development phase for the Balai Cluster.

On the successful completion of the pre-development phase and agreement on the project viability of the fields, the contractor group will submit a field development plan for all or some of the fields and progress to the development phase. Production from all the fields in the cluster is planned to be online within 24 months from commencement of the development program. Development activities are planned to include the drilling of wells, the installation of platforms, topsides and pipelines, and the tie-in of the new facilities to existing Petronas Carigali infrastructure as appropriate. The total cost of the development phase is estimated to be between US $650–700 million.

Contractor Group Partners

DIALOG Group is one of Malaysia's leading integrated specialist technical services providers to the oil, gas and petrochemical industries. Headquartered in Kuala Lumpur, DIALOG Group has over 2,000 employees across offices and facilities located in 12 countries, and is listed on the Main Market of Bursa Malaysia with current market capitalisation of approximately US $1.8 billion. The core services and activities provided by DIALOG Group range from upstream to downstream activities and encompass: logistic services for supply base and tank terminal operations; the provision of specialist products and services; the provision of plant maintenance and catalyst handling services; engineering, construction and fabrication; and ePayment technology and solutions.

Petronas Carigali is the wholly owned exploration and production subsidiary of Petronas, Malaysia's National Oil Company. Petronas Carigali has a successful track record of working with multinational corporations to explore, develop and produce oil and gas both in Malaysia and internationally.

CEO Comment

Commenting on the SFRSC award, ROC's Chief Executive Officer, Alan Linn, stated, "This is an encouraging first step in pursuing the Company's stated strategy to grow the business in South East Asia and represents another vote of confidence in ROC's abilities as an offshore operator of small and marginal fields.

"The award of the Small Field Risk Service Contract for the Balai Cluster is also a significant milestone for Petronas in pursuing its strategy of developing Malaysian marginal fields. ROC has worked productively with Petronas and DIALOG Group throughout the process leading to the SFRSC award and looks forward to building on these established relationships in the future.

"ROC's entry into Malaysia is an important achievement and meets one of the Company's key objectives for 2011: to capture value by delivering a new production or pre-development opportunity in South East Asia or Australia."

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Petronas to Award Second Deal for Marginal Field Soon

- Petronas to Award Second Deal for Marginal Field Soon

Monday, August 15, 2011
The New Straits Times
by Kamarul Yunus

Petroliam Nasional Bhd (Petronas) is expected to announce the second contract to develop a marginal oil field soon.

"Petronas is currently finalizing the second risk services contract (RSC) and will make an announcement in due time," a Petronas spokesman told Business Times.

The spokesman, however, did not identify the field.

In January this year, Petronas said it will award two marginal oil field contracts by April. The only RSC awarded so far is for the Berantai field to the Petrofac-Kencana Petroleum-SapuraCrest Petroleum partnership early this year.

But in its prospectus for listing on Bursa Malaysia last month, Bumi Armada Bhd said it was awarded a floating, storage and offload (FSO) vessel contract for the Sepat field. It is claimed to be the first under the marginal fields initiative of the government's Economic Transformation Program (ETP).

Responding to Business Times' query, the spokesman clarified that Sepat is a field currently being developed under a production sharing contract operated by Petronas Carigali Sdn Bhd, the exploration and production arm of the national oil company.

In December last year, Petronas Carigali awarded the engineering, procurement, construction, installation and commissioning contract for Sepat to Petrofac, which in turn awarded the FSO vessel contract to Bumi Armada.

The development of the marginal oil and gas fields under the new RSC arrangement is part of the initiatives under the ETP.

Malaysia, according to Petronas, has 106 marginal fields, with 580 million barrels of oil.

(C) 2011 The New Straits Times. via ProQuest Information and Learning Company; All Rights Reserved

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Gazprom Neft, Petronas Sign PSA with Cuba on 4 Offshore Blocks

- Gazprom Neft, Petronas Sign PSA with Cuba on 4 Offshore Blocks

Monday, August 01, 2011
Dow Jones Newswires
MOSCOW
by Alexander Kolyandr

Gazprom Neft, which is controlled by state gas company Gazprom, said Monday it has signed a product-sharing contract on four blocks in the Gulf of Mexico offshore Cuba with Petronas, the Malaysian national oil company, and Cubapetroleo, the Cuban national oil company.

Following the signing, Gazprom Neft becomes a party in the contract and acquires 30% stake in the project, while Petronas retains 70% in the project. Prior to the agreement Petronas had a 100% stake in the project.

In October 2010, Gazprom Neft and Petronas signed the Farm-out Agreement

"This partnership with Petronas will help Gazprom Neft to enforce its competence in the sphere of deep water development and expand its expertise in projects outside of Russia," Alexander Dyukov, chairman of Gazprom Neft management board said.

Apart from Cuba, Gazprom Neft participates in international exploration and production projects in Iraq, Equatorial Guinea, Venezuela and--through its Serbian affiliate company--in Angola, Romania and Hungary.

Copyright (c) 2011 Dow Jones & Company, Inc.

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Petronas Charigali, Turkmenistan Sign New Contract

- Petronas Charigali, Turkmenistan Sign New Contract

Wednesday, July 13, 2011
Knight Ridder/Tribune Business News
by H.Hasanov, Trend News Agency, Baku, Azerbaijan

The Malaysian state-owned Petronas Charigali petroleum company (operating in the Turkmen sector of the Caspian Sea since 1996), the State Agency for Management and Use of Hydrocarbon Resources under the Turkmen President, and the State Concern Turkmengas have signed an agreement for natural gas sales, an official Turkmen source reported.

This agreement coincides with the opening of a gas processing plant with a design capacity of 10 billion cubic meters of gas per year. It was built in the Caspian Sea town of Kiyanly. At the initial stage, the production will reach 5 billion cubic meters of gas.

The new plant will allow the company to begin exporting the associated natural gas from Turkmenistan, on whose resources Europe relies, with an attempt to diversify the sales markets.

One option to deliver Caspian resources is the Trans-Caspian Pipeline between Azerbaijan and Turkmenistan. This communication may be part of the large-scale Nabucco pipeline project.

As for oil, Petronas began the commercial production and export of raw material in May 2006, by using an oil transport route which passes through Azerbaijan and Iran.

Malaysia's Petronas Charigali is widely represented in Turkmenistan on the Turkmen market. The company signed the PSA with the Turkmen government in 1996 for the development of the Turkmen sector of the Caspian Sea. The contract area includes the fields Diyarbekir, Magtamguli, Ovez, Mashrikov, and Garagol- Denis.

Copyright (c) 2011, Trend News Agency, Baku, Azerbaijan

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OMV Completes Acquisition of Petronas Carigali

- OMV Completes Acquisition of Petronas Carigali

Wednesday, July 13, 2011
OMV

OMV successfully completed the acquisition of the entire share capital of Petronas' E&P operating entity in Pakistan from PETRONAS International Corporation Limited (Petronas) as of July 11, 2011. The government of Pakistan has provided its non-objection to the share transfer and change of control transaction pursuant to applicable laws in Pakistan.

Jaap Huijskes, member of the OMV Executive Board responsible for Exploration and Production, stated, "The acquired production, development and exploration licenses will strengthen OMV's position in the top league of foreign gas producers in Pakistan. OMV is well on the way to achieve the goal of increasing equity production in Pakistan to around 25,000 boe/d by 2014."

The acquired portfolio considerably strengthens OMV's position in Pakistan. With the completion of the share and change of control transaction, OMV increases its production by about 1,000 boe/d to 15,000 boe/d. The acquisition includes the Mubarak and Mehar exploration licenses as well as the Mehar and Mubarak development and production leases in the Indus Basin in central Pakistan. Through this acquisition, Pakistan gains a strong strategic position within the E&P portfolio and will help OMV reach its long-term growth objectives.

OMV started operating in Pakistan in 1991. The current gross production operated and processed by OMV (PAKISTAN) amounts to 530 mn scf/d (90,000 boe/d), which represents around 13% of Pakistan's gas supplies. The country offers growth potential supported with prospective as well as underexplored acreage. The good business environment and strong local energy demand support the growth aspirations.

Balanced international E&P portfolio

In 1Q/2011, OMV's oil and gas production was 304,000 boe/d. Its proven reserves were about 1.15 bn boe at year-end 2010. In its core countries Romania and Austria, OMV is focusing on reducing the natural decline and on enhancing the recovery rates from mature fields. Future growth is expected to come via new field developments, exploration and acquisitions internationally. OMV intends to grow the existing portfolio to and beyond critical mass, on a production per country basis, and is looking to find new growth areas within the Caspian, Middle East and North Africa regions where OMV can leverage on its existing E&P exposure.

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Petrofac, Petronas Sign MOUs, Strengthen Relationship

- Petrofac, Petronas Sign MOUs, Strengthen Relationship

Wednesday, July 13, 2011
Petrofac Ltd.

Petrofac has signed two memoranda of understanding (MOU) with Petroliam Nasional Berhad (PETRONAS).

The first MOU records the undertaking by Petrofac and PETRONAS to accelerate production from Block PM304, offshore Peninsular Malaysia, with a third phase of development. Petrofac owns a 30% equity share and is the Operator of PM304, which includes the Cendor and West Desaru fault blocks. Petrofac intends to accelerate the development of the West Desaru fault block by introducing an Early Production System which will involve both utilising current export facilities and also upgrading and deploying a Mobile Offshore Production Unit which is in the process of being purchased. This approach is expected to bring forward first oil production from West Desaru into the fourth quarter of 2012. The second phase development of the Cendor fault block, also in Block PM304, is expected to start up in the second quarter of 2013, bringing the overall production capacity of Block PM304 to around 60,000 barrels per day.

The second MOU outlines the intention between Petrofac and PETRONAS to collaborate in the area of competency development, capability building and education activities. This will involve a technical training partnership between Petrofac Training Services and Institut Teknologi Petroleum PETRONAS (INSTEP) to develop competency-based training for operations and maintenance personnel, as well as lecture and seminar programs with the Universiti Teknologi Petroleum (UTP).

Ayman Asfari, Petrofac Group Chief Executive, commented, "We have been working with PETRONAS since 2004, when we began the development of PM304 with the Cendor fault block. This is a relationship we value highly and which continues to deepen. We have today entered into two arrangements that will accelerate the development of PM304 and support PETRONAS in their continuous efforts in enhancing Malaysian capability in the oil & gas sector. In combination, we are providing a solution which addresses important strategic targets for PETRONAS and serves to underpin the strength of our Integrated Energy Services offering."

Dato' Shamsul Azhar Abbas, PETRONAS' President and Chief Executive said, "From the early stages of their entry into Malaysia's oil & gas upstream development PETRONAS has viewed Petrofac as one of its strategic partners. This view is reflected by the MOUs we have exchanged today. Going forward, PETRONAS will be able to access and benefit from a broader range of capabilities from across the Petrofac group, building on our existing partnership. We look forward to our continued collaboration with them."

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Subsea 7 Wins Petronas Contract in Malaysia

- Subsea 7 Wins Petronas Contract in Malaysia

Friday, June 10, 2011
Subsea 7

Subsea 7 announced the award of the Kumang Cluster Project by Petronas Carigali to Subsea 7 Malaysia Sdn Bhd. This award further cements Subsea 7's position in Asia Pacific and Middle East Region.

The project involves the transportation and installation of subsea structures, 5km of umbilical cable, pipeline jumpers and electrical flying leads, including the pre-commissioning of an existing 24" 5km pipeline and new umbilical in the Kumang Field.

The workscope comprises project management and engineering associated with the installation of the subsea equipment. A combined team from Subsea 7 and PETRONAS Carigali will deliver the project enabling greater development and understanding of deepwater technologies and allow most operations to be completed utilizing diverless intervention techniques. The work involves a high level of Malaysian content and will be managed by Subsea 7's office in Kuala Lumpur.

The project will be completed in two phases utilizing Rockwater 2 in 2011.

Dick Martin, Subsea 7's Vice President for Asia said, "Subsea 7 is delighted to be awarded the contract by PETRONAS Carigali to work on this prestigious project. This award underlines and further enhances our reputation in Malaysia in particular to provide safe and quality services to strategic partners such as PETRONAS Carigali."

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Petronas Purchases $1.1B Stake in BC Shale Assets

- Petronas Purchases $1.1B Stake in BC Shale Assets

Thursday, June 02, 2011
Progress Energy Resources Corp.

Progress Energy has executed a binding framework agreement to create a strategic partnership with the Malaysian national oil company, Petronas, to develop a portion of Progress' Montney shale assets in the Foothills of northeast British Columbia. Progress will sell 50 percent of its working interest in its Altares, Lily and Kahta properties (the "North Montney Joint Venture") to Petronas for $1.1B (CDN $1.07 billion). The agreement also reflects the desire by both parties to explore additional opportunities to develop liquefied natural gas (LNG) export capacity in British Columbia.

"This is a breakthrough transaction for Progress: the partnership we are launching will enable us to accelerate our growth strategy," said Michael Culbert, President and Chief Executive Officer of Progress. "We are very pleased to form this long-term partnership with Petronas. They share our belief that our North Montney shale assets are a world-class resource that deserves significant investment. We look forward to benefitting from Petronas' significant global expertise including their leadership in developing infrastructure and accessing LNG markets. As well as enhancing Progress shareholder value, this partnership will also generate substantial economic benefits for local communities and the province of British Columbia, while leveraging the environmental benefits of Canada's abundant and clean-burning natural gas resources globally."

Under the terms of the framework agreement, Petronas will pay 25 percent of the total consideration (CDN $267.5 million) in cash at closing and 75 percent of the total consideration in the form of a capital carry whereby Petronas will pay 75 percent of Progress' share of future capital expenditures in the North Montney Joint Venture over the next five years to a total of CDN $802.5 million. The Transaction provides Progress with the capital required to accelerate the development of its unconventional assets and unlock the value underlying the Company's vast Montney land holdings.

In addition to the above Transaction, Petronas and Progress will establish an LNG export joint venture (the "LNG Export Joint Venture") to be 80 percent and 20 percent owned, respectively. The LNG Export Joint Venture will launch a feasibility study to evaluate building and operating a new LNG export facility on the West Coast of British Columbia. PETRONAS would be the operator of this facility, and Petronas and Progress would jointly market the LNG utilizing Petronas' well-established and extensive network of customers in the largest LNG markets globally.

"Canada is poised to take a larger role on the world's energy stage. Developing new export options for Canadian natural gas producers is a logical step in connecting our vast resources with growing Asian demand for environmentally responsible energy sources like natural gas," said Mr. Culbert. "We look forward to working with West Coast British Columbia communities as we pursue this opportunity to build a new facility that will add value to British Columbia's natural resources while creating considerable long-term local economic benefits."

In connection with the LNG Export Joint Venture, Petronas will provide a standby equity financing commitment of up to $600 million, for Progress' capital requirements arising from the North Montney and LNG Export joint ventures from which Progress can draw down at the time of a successful LNG final investment decision.

The North Montney Joint Venture comprises 149,910 working interest acres in which Petronas will acquire a 50 percent interest and Progress will be the operator. The North Montney Joint Venture lands represent approximately 20 percent of Progress' rights in its northeast British Columbia Foothills land holdings, which total approximately 700,000 net acres. Progress holds approximately 900,000 net acres of Montney rights over its entire British Columbia and Alberta land base, making it one of the largest Montney land rights holders. The joint venture properties include five wells with minimal production at this time.

The closing of the transaction is subject to the execution of definitive agreements and receipt of regulatory approval. BMO Capital Markets acted as exclusive financial advisor to Progress on this transaction.

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Petronas Sells Cairn India Stake for $2.1B

Petronas Sells Cairn India Stake for $2.1B

Tuesday, April 19, 2011
Dow Jones Newswires
by Ankur Relia, Raghavendra Upadhyaya & Eric Yep

Malaysia's Petroliam Nasional Berhad, or Petronas, Tuesday said it exited Cairn India by selling its entire 14.94% stake in the oil and gas explorer for about $2.1 billion.

Petronas held 283.4 million shares in the Indian unit of Cairn through its overseas arm Petronas International Corp.

"The transaction brings to a close a successful association as a shareholder with Cairn India since 2006," Petronas said in a statement.

Petronas had raised its holding in Cairn India to 14.94% in 2009-10 after acquiring a 2.3% stake from Cairn Energy.

Petronas didn't reveal the names of the buyers but a person with knowledge of the matter told Dow Jones Newswires that the stake was sold to India-focused miner Vedanta and institutional investors in India via block deals.

Bank of America Merrill Lynch was the sole adviser on the deal, said the person, who declined to be named.

The stake sale by Petronas brings Vedanta closer to its goal of acquiring a majority stake in Cairn India as analysts don't expect a big response to Vedanta's open offer. Petronas' sale may also allow Edinburgh-based explorer Cairn Energy to retain a larger stake in Cairn India.

In August last year, Vedanta had offered to buy a 51%-60% stake in the Indian unit of Cairn Energy, in a deal expected to cost up to $9.6 billion.

The deal is awaiting approval from the Indian government.

Cairn Energy owns a 62.37% stake in Cairn India.

Vedanta has proposed to acquire up to 51% of Cairn India from its U.K. parent for INR405 a share. Vedanta unit Sesa Goa launched an open offer on April 11 for up to 20% of Cairn India from minority shareholders at INR355 a share. The open offer price doesn't include the INR50 non-compete fee that Vedanta had offered to Cairn Energy.

The open offer closes on April 30. Shares of Cairn India, which had earlier risen to as much as INR370, closed up 2.3% on Tuesday at INR344.25.

Vedanta, Cairn Energy and Cairn India didn't immediately respond to queries.

Earlier Tuesday, data on Factset showed that about 283.43 million shares of Cairn India were traded through block deals on the Bombay Stock Exchange. The three largest deals were for 265.19 million shares traded at a weighted average price of INR331.08 apiece, 12.08 million shares at INR331.08 each and 5.07 million shares at INR331.07 apiece.

The CNBC-TV18 television channel reported, citing sources it didn't name, that Vedanta bought an 11% stake in Cairn India from Petronas.

Cairn Energy has extended by more than a month the deadline for the stake sale to Vedanta to May 20 in order to accommodate the completion of the open offer and as an Indian ministerial panel scrutinizes the deal.

Cairn India holds stakes in 10 oil and gas blocks in India, including the huge RJ-ON-90/1 oil block at Barmer in western Rajasthan state. The block's output of 125,000 barrels a day accounts for about 17% of India's total crude production.

Shell to Start Drilling at Iraq Majnoon Oil Field in July

Shell to Start Drilling at Iraq Majnoon Oil Field in July

Thursday, March 31, 2011
by  Hassan Hafidh

Shell along with its partners, Malaysia's Petronas and the Iraqi state Missan Oil Co., will start drilling the first new well in the super-giant Majnoon oil field in July, a company executive said Thursday.

"Shell is targeting July 2011 to spud the first well," Ole Myklestad, managing director of Shell in Iraq told reporters in Basra.

Between 15 and 20 wells will be drilled in Majnoon oil field in southern Iraq and some 27 others will be refurbished to bring output to 175,000 barrels a day by the end of next year from the current 60,000 barrels a day, Myklestad said. The new wells and the refurbish work is part of an early production plan.

The well drilling is part of a contract Shell and its partners signed with U.S. service giant Halliburton and the state-run Iraqi Drilling Co. last year.

The executive also said that Shell has opened a new office in Basra to manage its projects in Iraq. The office is to make sure that "we have the human resources and all the supports required by an international company in Basra."

Myklestad said that there are some 300 Iraqis working on the Majnoon project and they are from the state-run South Oil Co. Some 50 Shell expatriate personnel are also working on the project, he said.

Shell and Petronas won the right to develop Majnoon oil field, located in Basra governorate in southern Iraq, at an auction held in Baghdad December 2009. Shells owns 45% of the venture and Petronas 30%, with Iraq's Missan Oil Co. the remaining 25%.

Shell also will start constructing a 75 kilometer pipeline to connect Majnoon with the crude oil depots in Faw, as a stop before shipping the crude into vessels in the Gulf. Myklestad said that Shell and its partner would provide the finance for building the pipeline.

The Anglo-Dutch giant is also planning to commence a seismic survey but after clearing mines left from the 1980-88 Iraq-Iran war.

"We want to get results of a seismic survey in the next two years," he said.