Malaysia Opens Seven Deepwater Oil Blocks

Malaysia is opening seven new deepwater blocks for oil exploration after striking crude for the first time in deep water last year, an official at state-owned Petronas said on Thursday. "A short-list of oil companies has been drawn up for the seven blocks and they're being invited for a data review," a spokesman at Petronas said. The names of the oil companies making the short-list was not disclosed.

Petronas' production-sharing contractors in Malaysia include Shell, Total and ExxonMobil and Murphy Oil.

Murphy found Malaysia's first deepwater oil in Block K, offshore the West Malaysian state of Sabah, a year ago. The U.S. company has estimated reserves in that block at 400-700 million barrels.

The Petronas spokesman said of the seven new blocks being opened, five were located northwest of Borneo island in the territorial waters of Sarawak and Sabah.

The five blocks had a combined area of about 32,605 square km (20,260 square miles). The remaining two blocks were on the eastern part of Sabah in the Sulawesi Sea, covering a total of 25,665 square km (15,947 square miles).

The Petronas spokesman said those interested in bidding for the blocks after the review had 90 days to submit their evaluations and proposals. "But the speed of the award would depend on the negotiation process, which could take months to finalize," he said.

The search for new oil fields is part of Petronas' efforts to overcome shrinking national reserves. As of January 1, Malaysia had oil reserves of 4.54 billion barrels, while natural gas reserves were at 89 trillion cubic feet. At current rates of production, the oil and gas reserves can last the country 18 and 35 years respectively.