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Petronas Drops Offshore Tembikai, Chenang RSC Award

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Petronas clarified through a statement Friday that it has decided not to proceed with the award of the Small Field Risk Service Contract (RSC) for the Tembikai and Chenang Cluster. The state-backed company's disclosure comes amid recent heavy speculation about companies said to have been dropped off the bidding process.

"We decided that in this case, it will be best to issue a clarification statement directly from Petronas," a spokesperson told Rigzone on Friday.

Malaysia's Scomi Group issued a statement on Jan.11, stating that it will continue to support a bid submission to Petronas for the Tembikai and Cenang Cluster Offshore Terengganu RSC project, after local media reported earlier that week that the bid placed by Scomi-Cue Resources was not progressing smoothly.

Cue Energy was among the marginal oil field contractors invited to bid for the contract, with Scomi brought onboard as the local partnering company.

Petronas is understood to have held technical reviews for Tembikai and Cenang with the shortlisted bidders that include the likes of international oil field services providers such as Baker Hughes, Halliburton and Petrofac, as well as independents such as AWE and Hydra Energy. Potential Malaysian companies in the bidding mix with the foreign players include SapuraKencana, Dialog, Alam Maritim, Daya Materials and Scomi.

The spokesperson confirmed that Petronas held a competitive bid exercise last year. The company eventually decided not to proceed with the RSC award as it is still in internal discussions about terms and conditions governing the RSC.

"But this does not mean that the RSC will not be re-opened at a later stage," the spokesperson added.

The development at Tembikai and Cenang will primarily target gas production. Discovered in the 1980s, Tembikai is expected to be developed over a period of up to nine years, with the project costing $500 million to $1 billion.

RSC contracts from Petronas have drawn much interest among international oil exploration companies, given Malaysia’s renewed focus on developing its domestic oil and gas assets. Back in 2011, Petronas noted that it aimed to award four marginal fields per year. However, thus far, only the Berantai and Balai fields have been dished out. This implies that Petronas could ramp up on its efforts on the RSC front, and look to award more contracts this year.

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