Petronas Carigali Sdn Bhd (PCSB), a wholly-owned subsidiary of Malaysia’s Petronas, has signed an agreement to farm out 50% stake in the Samarang Production Sharing Contract (PSC) offshore Sabah, East Malaysia to SMJ Sdn Bhd (SMJSB).
SMJSB is a wholly-owned by the Sabah State Government.
Subject to regulatory approvals and fulfillment of conditions precedent, the farm-out agreement, (FOA) follows the signing of heads of agreement (HOA) between PCSB and SMJSB in February 2023, confirming the latter’s participation in the Samarang PSC.
The Samarang PSC comprises key oil and gas hubs in Sabah. It currently has production of about 36,000 barrels of oil and gas equivalent per day (kboe/d).
In a press statement, Petronas said: “This collaboration bears testament to PETRONAS’ continuous commitment to achieving its shared aspiration of sustainable growth for the domestic oil and gas industry.”
Under the FOA, PCSB will continue to operate the Samarang PSC with 50% stake while Sabah state unit SMJSB will hold the remining stake.
Commenting on HOA, Petronas president and group CEO Datuk Tengku Muhammad Taufik earlier 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.”
In February 2023, PCSB and E&P Malaysia Venture signed a letter of understanding with SMJSB pertaining to the back-in option arrangement on the Block SB409 PSC.
This gives up to 20% stake in the Block SB409 PSC to Sabah State Government upon completion of work commitment or making commercial discovery, whichever occurs first.