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Felicity Bradstock

Felicity Bradstock

Felicity Bradstock is a freelance writer specialising in Energy and Finance. She has a Master’s in International Development from the University of Birmingham, UK.

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Southeast Asia Looks To Increase Offshore Oil Production

Malaysia and Brunei have signed an agreement to develop two offshore oil fields on the maritime boundary, with greater exploration of recent ultra-deepwater discoveries.

The governments from both countries signed a unitisation agreement to develop the Gumusut-Kakap and Geronggong-Jagus East offshore oil fields. Development will be managed by Malaysian state-owned Petronas and Brunei’s National Unitisation Secretariat (NUS). 

The agreement took place during Prime Minister Tan Sri Muhyiddin Yassin's visit to Brunei. It is one of several initiatives that was agreed upon during the official visit.  

“Having now formalised this landmark agreement, PETRONAS believes that both parties can look forward to continuing the strong momentum towards developing our nations’ energy sectors for the long-term growth and prosperity of both Brunei and Malaysia.” Tengku Muhammad Taufik Tengku Kamadjaja Aziz, Petronas president and group CEO, said of the agreement.

The Gumusut-Kakap field waters reach a depth of 1,200m, allowing for the development of two ultra-deepwater projects, Gumusut and Kakap. The field consists of 19 undersea wells. The maritime border location provides a new area of development for the oil industry in both countries. 

Malaysia and Brunei are also expected to sign a memorandum of understanding on Transport Cooperation to develop their partnership in the areas of safety, security, intelligent transport systems and logistics. In addition, the two states could soon also reach a modernised Air Services Agreement and are expected develop their partnership to enhance gas resources across the two countries. 

In the 23rd Annual Leaders' Consultation, held in Brunei, the national leaders from both states solidified existing commitments to information and communication technology, agriculture - food supply chains and distribution, trade and tourism. 

Related Video: Iran’s Oil Exports Render Sanctions Irrelevant

This is not the only oil project to come out of Brunei in recent weeks. In late March, the government of Brunei announced plans to triple oil production over the next five years as Brunei Shell Petroleum (BSP) began exploratory drilling in deepwater wells.

BSP is preparing to drill deepwater exploration wells Merbah Deep-1 and Jagus Subthrust-1. The company has had a significant stake in Brunei oil since the discovery of the Seria field in 1929, with around 4,000 employees and over 20,000 contractors at present.

Brunei’s Ministry of Energy said of the development last week, “Both exploration wells will form a key test in proving new hydrocarbon volumes and opening up the deepwater, further in alignment to the ministry’s strong emphasis to the operators to develop existing deepwater fields in the near to mid term”. 

The government hopes to expand national production to 350,000 bpd equivalent by 2025, owing largely to deepwater digging. This is a significant increase from the 2020 dip to 105,100 bpd. 

As well as being hit hard by the Covid-19 pandemic, with four consecutive quarters of negative growth in 2020, Brunei’s oil industry has been declining since 2006. However, greater investment from BSP and the new exploration agreement with Malaysia could see the oil and gas industry develop substantially over the next decade. 

By Felicity Bradstock for Oilprice.com

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