PETRONAS and Shell Malaysia signed Friday a Heads of Agreement (HOA) for two 30-year production sharing contracts (PSCs) for enhanced oil recovery (EOR) projects offshore Sarawak and Sabah.
The HOA will see staged work activities and new investments from Shell and its joint venture partner PETRONAS Carigali Sdn Bhd (PCSB), to extend the life and increase the recovery factor of the Baram Delta (BDO) and North Sabah fields.
The improvement in the recovery efficiency of the oil fields may result in an additional 90 to 100 kboe/d of oil production and extend the field life to beyond 2040.
"This new agreement confirms Shell's commitment to continue investing in Malaysia and its position as a heartland for Shell. The agreement also provides an opportunity to work together with PETRONAS on building local knowledge and capabilities in enhanced oil recovery," said Shell's CEO Peter Voser said.
The new agreement will build upon the existing BDO and North Sabah production sharing contracts, located offshore Sarawak and Sabah, respectively.
PETRONAS Carigali holds a 60 percent equity interest in the BDO production sharing contract (expiry 2018) and is operator while Shell holds the remaining 40 percent interest. The North Sabah PSC (expiry 2019) is Shell operated with each company holding an equal 50 percent equity interest.
The projected increase in the average recovery factor in the BDO and North Sabah fields will see a rise from 36% to 50%, adding significant value to the upstream industry in Malaysia sustainably over the coming decades. The technology employed in the North Sabah fields could potentially lead to the first field-scale offshore Chemical EOR in the world. To date, Shell has participating interests in 14 PSCs in various offshore blocks in Sarawak and Sabah.
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