Petronas, Partners to Spend $5.05B to Develop Gas Offshore Malaysia
KUALA LUMPUR (Dow Jones Newswires), Aug. 23, 2011
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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