The Government of Brunei and Petronas have agreed to jointly develop an offshore block off the coast of Borneo.

A production sharing agreement for block CA1 was signed between the Brunei Government and Malaysia’s Petronas.

The Government of Malaysia said the agreement is a significant step forward in the development of cooperation between the petroleum authorities of both countries.

Malaysia and Brunei said there is potential for future cooperation in an oil and gas exploration joint venture in a third country, reports Reuters.

Two offshore blocks, CA1 and CA2, were awarded to Petronas and Murphy Oil in 2003, but were cancelled after Malaysia and Brunei agreed that the blocks were not part of Malaysia.