Nippon Oil to Develop Serai Field Offshore Malaysia

JNOC will grant liability guarantee to Nippon Oil Exploration (Sarawak), Ltd. JNOC loan guarantee is required to finance the development of Serai gas field in which the recipient firm has been participating.

NOSA acquired a 37.5% working interest of Block SK-8 offshore Sarawak, Malaysia from Occidental Petroleum Corporation in 1991. JNOC has been assisting NOSA through providing funds for exploration since June of that year.

As a result of exploration activities, six gas fields, including Jintan and Serai, have been discovered. The development plan in which gas from these fields would be supplied to the MLNG-3, the liquefied natural gas plant in Bintulu, Sarawak, was formulated and an ensuing feasibility study found it commercial.

Among the six discovered gas fields, Jintan field was chosen for the first phase of the development plan. At the moment, installation of well-head platform and drilling of production wells have been under way on that field, and production from Jintan is expected to commence in the 3rd quarter of 2003. In December 2001 it was decided that JNOC's loan guarantee would be granted to finance the Jintan development.

Following Jintan, Serai field was picked as the second field to be developed. On November 28, 2002, JNOC decided to provide the liability guarantee for the Serai development as well. The expected amount of JNOC loan guarantee will be US$17.95 million equivalent to 50% of the loan which NOSA will require to finance the Serai development by 2004. It is expected that production from Serai will begin in the 2nd quarter of 2004 to supply gas to the MLNG-3.