Malaysia’s Petronas, Brunei in talks on cancelled contracts

KUALA LUMPUR, May 1 (BestGrowthStock) – Malaysia’s Petronas
[PETR.UL] has started negotiations with the government of
Brunei to develop two blocks offshore Malaysia after an earlier
contract was terminated last month, the state oil firm said on
Saturday.

The offshore exploration areas, formerly designated as
Block L and Block M, were awarded to Petronas and Murphy Oil
Corp (MUR.N: ) in 2003 but were cancelled in April after Malaysia
and Brunei agreed that the blocks were not part of Malaysia.

The agreement, executed through an Exchange of Letters in
March 2009, was a culmination of a long-standing issue between
the two countries.

The agreement now allows Petronas to enter into new
production sharing contracts for the blocks off Borneo island,
which have been redesignated as Blocks CA1 and CA2, Petronas
said in a statement.

“Petronas would like to clarify that following the Exchange
of Letters, Petronas was invited by Brunei to enter into an
agreement to develop Blocks CA1 and CA2 on a commercial
arrangement basis,” it said.

Petronas and the government of Brunei are now working out
the terms of the commercial arrangement. Murphy said
last week its potential participation in replacement production
sharing contracts covering these areas is under discussion.
[ID:nN21222980].

Former prime minister Abdullah Ahmad Badawi, who signed the
deal with Brunei at the time, said in a statement this week
that Malaysia would be allowed to participate in developing the
two blocks on a commercial basis for 40 years.

He was responding to his predecessor Mahathir Mohamad who
said the deal with Brunei cost Malaysia at least $100 billion
in oil revenues from estimated reserves of almost a billion oil
barrels.

Stock Market Report

(Reporting by Julie Goh; Editing by Niluksi Koswanage)

Malaysia’s Petronas, Brunei in talks on cancelled contracts