Kuala Lumpur: A prolonged fracture between the National Oil Corporation of Malaysia Petronas and the State Government of the Sarawak seems to cause investors' concern following a surprise withdrawal from the US oil company Conocophillips from an oil project off the Borneo coast.
In a surprise move little subscribed this month, Conocophillips has decided to withdraw from the exploitation of the Oil and Gas field of Salam-Patawali in deep water that the company discovered in 2018 with Petronas in a 50-50 switching which should cost 13 billion RM (3.13 billion US dollars).
The withdrawal was reported for the first time by Upstream Online, a largely followed industry information resource on April 15, but was not reported in the Malaysia media.
Two industry sources close to the Conocophillips have confirmed the withdrawal with AIIC separately. They added that this decision was part of a “country strategy review” on which the company did not develop.
CNA's efforts to reach the business leaders in its Kuala Lumpur office failed because telephone calls remained unanswered.
Industry leaders told AIIC that Conocophillips's decision was partly motivated by the uncertain regulatory environment resulting from the spatching between Petronas and the government of the state led by Prime Minister Abang Johari OpenG.
The Sarawak government, which owns the petroleum and gas company Petroleum Sarawak or Petros, requires greater control over its resources.
Industry leaders with close links with Conocophillips have declared that the company would now focus on its activities in Voisin Sabah, where it already has operations.
“The feeling is that foreign companies are uncomfortable because they see that Petronas is under pressure in Sarawak and that the petroleum company (Petronas) is often the joint partner in many exploration projects,” said a senior executive of a Western oil transfer company based in the capital Kuala Lumpur.
According to Conocophillips information sheet on its operations in Asia-Pacific dated April 2024, it has exploration, development and production activities on around 2.7 million net acres in Malaysia.
Net hectares refer to the amount of the rented real estate that a company holds, concerning its professional interest.
He has employment interests in six production sharing contracts in Malaysia, and Petronas is listed as a “co-attenu” in the six contracts.
The Salam-Patawali exploration block includes 300,000 net acres mainly in the Salam and Benum fields behind the coast of Sarawak.
“The company continues to assess the block and information from the results of previous wells. A 3D seismic survey was acquired in 2023, and the processing and evaluation of this data is currently underway, “he said.
As a general rule, within the framework of production sharing contracts signed with Petronas, private oil companies abandon the rights of oil fields to Malaysia Oil Corporation if it decides to stop exploration and production plans.
