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Malaysia: PETRONAS and Sabah State expand collaboration in upstream

27 Feb 2023

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PETRONAS and the Sabah State Government continue to expand the collaboration in the oil and gas industry through a Heads of Agreement (HOA) signed between PETRONAS Carigali (PCSB), a wholly-owned subsidiary of PETRONAS and SMJ (SMJSB), a company wholly-owned by the Sabah State.

The HOA paves the way for SMJSB’s potential acquisition of a 50 per cent participation interest in the Samarang Production Sharing Contract (PSC). The Samarang field is located approx. 50 km offshore Sabah.

The agreement was signed between PCSB’s Chief Executive Officer, Hasliza Othman and Chief Executive Officer of SMJSB, Dr. Dionysia Aloysius Kibat. It was witnessed by PETRONAS President and Group Chief Executive Officer, Datuk Tengku Muhammad Taufik, Sabah Chief Minister, Datuk Seri Panglima Haji Hajiji Haji Noor and Sabah Finance Minister, Datuk Seri Panglima Masidi Manjun.

Datuk Tengku Taufik said, 'PETRONAS shares the State’s aspirations for mutual prosperity even as we both pursue sustainable development. Having SMJSB on board as our upstream business partner underscores PETRONAS’ efforts to build a more inclusive environment for the oil and gas industry in Sabah, both offshore and onshore.'

'SMJBS’s potential participation in the Samarang PSC also demonstrates PETRONAS’ continued commitment under the Commercial Collaboration Agreement to develop and unlock the full potential of Sabah’s oil and gas industry,' he added.

The Samarang PSC is a producing asset encompassing key oil and gas hubs in Sabah. Currently it is producing approx. 36,000 barrels of oil equivalent per day (boe/d) for both oil and gas. The gas is delivered to customers in Kota Kinabalu and Labuan.

Earlier this year, PETRONAS Chemicals Group Berhad signed a HOA which welcomed SMJSB as its partner to PETRONAS Chemicals Fertiliser Sabah Sdn Bhd with a 25 per cent of equity interest in PETRONAS Chemicals Fertiliser Sabah, as part of its efforts in providing for greater revenue sharing with the Sabah GLC.

On 15 February 2023, PCSB and E&P Malaysia Venture also signed a Letter of Understanding with SMJSB on the back-in option arrangement on the Block SB409 PSC, giving the Sabah State Government up to 20 per cent participating interest upon completion of work commitment or commercial discovery, whichever is earlier.

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