Malaysia, Brunei Reach Agreement on Overlapping Blocks

Malaysia and Brunei agree on the way to implement an agreement on oil and gas exploration in the overlapping area offshore Blocks CA1 and CA2, Malaysian Prime Minister Najib Razak said in Brunei's capital Bandar Seri Begawan Tuesday.

The agreement was a follow up to the Exchange of Letters - signed by both countries in 2009 to resolve the issue of overlapping area in the two blocks - as Najib and the Sultan of Brunei Hassanal Bolkiah decided on the interpretation of its content during the 19th Malaysia-Brunei Annual Leaders' Consultation at Istana Nurul Iman, Malaysian news agency Bernama reported Tuesday.

"On the Exchange of Letters, an agreement signed in 2009, we finalized certain aspects of the interpretation, including the definition of 'government take' to Brunei by 15 percent ... The interpretation was resolved by both of us, and also other technical aspects ... In other words, if oil and gas were found in Blocks CA1/CA2, there will be no problem in terms of dividing them between Malaysia and Brunei," Najib commented, as quoted by Bernama.

Malaysian national oil company Petroliam Nasional Berhad (PETRONAS) and Petroleum BRUNEI entered into a Production Sharing Agreement for Blocks CA1 and CA2 in 2010.

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