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Petronas snaps up small field development in Malaysia on new terms

© BloombergThe Petronas Twin Towers stand reflected in the windows of the China Construction Bank Corp. office in Kuala Lumpur, Malaysia, on Wednesday, Jan. 30, 2019. Photographer: Samsul Said/Bloomberg
The Petronas Twin Towers stand reflected in the windows of the China Construction Bank Corp. office in Kuala Lumpur, Malaysia, on Wednesday, Jan. 30, 2019. Photographer: Samsul Said/Bloomberg

Malaysia’s national oil company Petronas has awarded the production sharing contract (PSC) for the South East Collins Cluster under the newly introduced Small Field Asset (SFA) PSC terms, to Vestigo Petroleum.

However, the news could potentially send a chilling message to global players that are specialists in this type of field, as Vestigo is a subsidiary of Petronas Carigali.

“Another example of Petronas’ ‘green washing’ their competitiveness by awarding this to a wholly owned subsidiary and then trying to make it look like news. Clearly, the global investors will continue to shy away as long as Petronas continues to keep the good bits for themselves,” a Malaysian-based industry source told Energy Voice.

With combined estimated recoverables of 10 million barrels, the South East Collins Cluster is now primed for development under the new SFA PSC terms, reported Petronas yesterday. South East Collins Cluster, located in water depths of 42 to 45 metres 70km north east of Labuan Island, comprises two fields namely South East Collins and Lokan which were discovered in the 1980s.

The PSC was signed yesterday where Petronas and Vestigo were respectively represented by Petronas senior vice president of Malaysia Petroleum Management, Mohamed Firouz Asnan and chief executive of Vestigo, Hazanie Jamian.

“The award of the cluster of fields under the much-anticipated new fiscal terms is expected to spur the development and production of more small fields in the future. The new SFA PSC is aimed at monetising an inventory of small discovered resource opportunities available in Malaysian waters. Vestigo was chosen based on its track record as a low-cost operator in developing and operating small fields,” said Firouz.

“We welcome operators who are specialised in the development of small fields to extend their capabilities here in Malaysia. For many of these fields to work, we need operators with the right mindset and business model to take advantage of the customised fiscal and non-fiscal terms offered by Petronas. Under the current volatile oil prices, these operators must also employ innovative solutions to ensure the lowest total life cycle cost,” he added.

Vestigo, a subsidiary of Petronas Carigali, currently operates the Irong Cluster PSC, SK315 PSC, PM335 PSC and the Tembikai Chenang Small Field Risk Sharing Contract. In addition, it also holds non-operating interests in PM9 PSC and SK407 PSC.

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