Sabah Colonised: Real story of Sabah's Petroleum resources

Malaysian oilfields: 50,000 drums per day

The Commercial Arrangement Area (CAA) in the Malay Basin, which
Malaysia shares with Vietnam, also contributes to the country's oil
production. Talisman Energy (Canada) holds operating interests in the
Northern and Southern oil fields in the CAA. While the Southern Fields
are still under exploration, the Northern Fields development
reportedly began producing at 25,000 bbl/d in August 2009, reportedly
rising to 50,000 bbl/d in early 2010. Talisman holds a 41.4 percent
interest, Petronas holds a 46 percent interest and PetroVietnam has
12.5 percent. Talisman is continuing to explore and develop fields in
the area.

Sabah's oil fields: 300,000 drums per day

Construction began on the Sabah Oil and Gas Terminal (SOGT) in
February 2007 and it is expected to be completed by 2012. It will have
handling capacity of 300,000 barrels of crude and 1 billion cubic feet
of natural gas per day and will primarily serve Malaysia's export
markets. The Sabah-Sarawak Gas Pipeline project is part of this
development.

With one drum of petrol can earn US100, at 300,000 drums per day, it
will be 30 million US$ per day.

I'm afraid Sabah will see very little of this revenue but instead more
destruction and poverty as a result of the pollution created. What a
sad end to the heaven that was Sabah.

http://www.eurasiareview.com/analysis/malaysia-energy-profile-31122010/

Malaysia Energy Profile:

Written by: Eurasia Review
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(EIA) –Malaysia's national oil and gas company, Petroleam Nasional
Berhad (Petronas), holds exclusive ownership rights to all oil and gas
exploration and production projects in Malaysia and is the single
largest contributor of Malaysian government revenues, almost half in
2009, by way of dividends and taxes.

As Malaysia's oil fields are maturing, the government is focused on
enhancing output from existing fields and from new offshore
developments of both oil and gas, which are expected to increase
aggregate production capacity in the near- to mid-term.

Malaysia's western coast runs alongside the Strait of Malacca, an
important route for seaborne energy trade that links the Indian and
Pacific Oceans. Malaysia's position in the South China Sea makes it a
party to the various disputes among neighboring countries over
competing claims to the sea's resources. Although Malaysia has
bilaterally resolved competing claims with Vietnam, Brunei, and
Thailand, a potential problem is the fact that China claims almost all
of the South China Sea, including the Spratly Islands, which are in
proximity to oil and gas producing basins.

Oil

According to the Oil & Gas Journal (OGJ), Malaysia held proven oil
reserves of 4 billion barrels as of January 2010. Nearly all of
Malaysia's oil comes from offshore fields. The continental shelf is
divided into 3 producing basins: the Malay basin in the west and the
Sarawak and Sabah basins in the east. Most of the country's oil
reserves are located in the Malay basin and tend to be of high
quality. Malaysia's benchmark crude oil, Tapis Blend, is very light
and sweet with an API gravity of 44° and sulfur content of 0.08
percent by weight.

Top 5 Asia-Pacific Proven Oil Reserve Holders, January 2010

Sector Organization

Malaysia's national oil and gas company, Petroleam Nasional Berhad
(Petronas), holds exclusive ownership rights to all oil and gas
exploration and production projects in Malaysia, is responsible for
all licensing procedures, and is subject to only the prime minister,
who controls appointments to the company board. The company holds
stakes in the majority of oil and gas blocks in Malaysia. It is the
single largest contributor of Malaysian government revenues, almost
half in 2009, by way of dividends and taxes. Since its incorporation,
Petronas has grown to be an integrated international oil and gas
company with business interests in 31 countries. It was ranked by
Fortune as the 80th largest corporation in the world in 2009 and the
13th most profitable. All foreign and private companies must operate
through production sharing contracts (PSCs) with Petronas. ExxonMobil
is the largest foreign oil company by production volume and other
major foreign oil producers operating in Malaysia via PSCs include
Shell, Murphy Oil, and Talisman Energy.

Energy policy in Malaysia is made and overseen by the Economic
Planning Unit (EPU) and the Implementation and Coordination Unit
(ICU), which report directly to the Prime Minister. Malaysia's oil and
gas policy has historically focused on maintaining the reserve base to
ensure long term supply security while providing affordable fuel
supplies to its population. In July 2010, the government introduced
subsidy reductions for gasoline, diesel, and liquid petroleum gas
(LPG) with the aim of gradually rationalizing the fuel subsidy system
to reduce expenditures. Further cuts in fuel subsidies are expected.

Exploration and Production

Total oil production in 2009 was 693,000 barrels per day (bbl/d), of
which 83 percent was crude oil. More than half of total Malaysian oil
production currently comes from the Tapis field in the offshore Malay
basin. Malaysian oil production has been gradually decreasing since
reaching a peak of 862,000 bbl/d in 2004 due to its maturing offshore
reservoirs. Malaysia consumes the majority of its production and
domestic consumption has been rising as production has been falling.
Exports in 2009 were 157,000 bbl/d. However, the government is focused
on opening up new investment opportunities by enhancing output from
existing fields and developing new fields in deepwater areas offshore
Sarawak and Sabah.

Exxon-Mobil's enhanced oil recovery project at the Tapis field, which
lies 118 miles off Terengganu in 210 feet of water, will start up in
2013, with an estimated gross investment of more than $1 billion.
Tapis is one of 7 mature fields offshore peninsular Malaysia that
ExxonMobil and Petronas have agreed to develop as part of a 25-year
production-sharing contract that was finalized in June 2009. Under the
agreement, which includes provisions for the deployment of enhanced
oil recovery and further drilling to boost output, work will be
carried out on all 7 fields, including Seligi, Guntong, Tapis,
Semangkok, Irong Barat, Tebu, and Palas.

The over-20-years dispute between Malaysia and Brunei over land and
sea boundaries was ended when the two countries signed a boundary
agreement in April 2009. Blocks L and M were ceded to Brunei while
Limbang, a popular tourist site on the Sarawak-Brunei border, was
ceded to Malaysia. In September 2010, Petronas and the Brunei
government reportedly agreed to jointly develop the 2 blocks offshore
Borneo Island, signing a 40-year production sharing agreement for
newly named Block CA1; an agreement on Block CA2 is expected.

Deepwater oil production projects under development are all offshore
Sabah:
The Kikeh oil field is currently Malaysia's only producing deepwater
oil field. It is offshore Sabah in 4,400 feet of water and was
discovered and is operated by Murphy Oil in partnership with Petronas.
It came onstream in 2007 at an initial rate of 20,000 bbl/d; estimated
production in 2010 is 68,000 bbl/d of oil and 62 mcf/d of gas. Murphy
Oil is carrying out more developmental drilling in order to boost
output to 120,000 bbl/d in the near term. The nearby Kakap and Siakap
fields, discovered in mid-2009 in the same block, will be tied into
Kikeh in 2011 and 2013, respectively, to maintain steady production
through 2015.

The Gumusat/Kakap project, offshore Sabah in 3,900 feet of water, will
include the region's first deepwater floating production system from
19 subsea wells. Gumusat/Kakap is expected to be onstream in 2012 with
production of 150,000 bbl/d, using reinjected associated gas to
maintain pressure. Shareholders are Shell, the operator, at 33
percent, ConocoPhillips at 33 percent, Petronas at 20 percent, and
Murphy Oil at 14 percent. The system will be connected via pipelines
to the new Sabah Oil and Gas Terminal being built in Kimanis, which is
also expected to be completed by 2012.

Development is also underway at the Kebabangan Northern Hub
development project (KBB), to be brought online together with Gumusat/
Kakap and Malikai between 2012 and 2014. KBB, about 87 miles northeast
of Kimanis, will be the hub for the development of deepwater oil and
gas assets offshore Sabah. The KBB platform will be located in 460
feet of water and has a design capacity of 825 Mmcf/d of gas and
22,000 bbl/d of condensate. It consists of 4 contiguous fields being
developed by the Kebabangan Petroleum Operating Company (KPOC),
consisting of Petronas at 40 percent, ConocoPhillips at 30 percent,
and Shell, the operator, at 30 percent.

The Malikai oil and gas field is located nearby and will be tied into
the KBB via liquids and dry gas pipelines shortly after first gas
comes from KBB. It will supply the Sabah Oil and Gas Terminal. The
field was discovered in 2004 at 1,854 feet and field development began
in 2009. Malakai is expected to come online by 2013 with production of
up to 150,000 bbl/d. Shell is the operator at the Malikai oil field
with 35 percent interest, in partnership with ConocoPhillips at 35
percent and Petronas with 30 percent.

Oil Pipelines

Malaysia's main oil pipelines connect oil fields offshore Peninsular
Malaysia to onshore storage and terminal facilities. From the Tapis
oil field runs the 124-mile Tapis pipeline, which terminates at the
Kerteh plant in Terengganu, as does the 145-mile Jerneh condensate
pipeline. The oil pipeline network connecting oil fields offshore
Sabah with the coast is currently expanding following the launch of
development projects including the Kebabangan cluster, the Malikai,
Gemusat/Kekap, and Kikeh oil fields. The majority of pipelines are
operated by Petronas, although ExxonMobil also operates a number of
pipelines connected with its significant upstream holdings located
offshore Peninsular Malaysia.

An international oil products pipeline runs from the Dumai oil
refinery in Indonesia to the Melaka oil refinery in Melaka City,
Malaysia. An interconnecting pipeline then runs from this refinery via
Port Dickenson to the Klang Valley airport and to the Klang oil
distribution center.

Downstream Activities

According to OGJ, Malaysia had about 515,000 bbl/d of refining
capacity at six facilities as of January 2010. Petronas operates 3
refineries (259,000 bbl/d total capacity), while Shell operates 2
(170,000 bbl/d total capacity), and ExxonMobil operates one (86,000
bbl/d). Malaysia invested heavily in refining activities during the
last two decades and is now able to meet most of the country's demand
for petroleum products domestically, after relying on the refining
industry in Singapore for many years.

Petronas' refinery in Melaka is a joint venture with ConocoPhillips,
which owns a 47 percent interest. The refinery produces a full range
of refined petroleum products. An expansion project at Melaka is being
completed in 2010 to increase crude oil, conversion, and treating unit
capacities.

The Sabah Oil and Gas Terminal is under construction in Kimanis by
Samsung Engineering, and is expected to be completed by end-2013. It
will receive crude from offshore fields, process and distribute the
products via a planned 310-mile onshore pipeline linking Sabah with
Bintulu, Sarawak. The terminal will have a processing capacity of
300,000 bbl/d of crude and condensate, and 1.25 million cubic feet per
day (Mmcf/d) of natural gas.

Natural Gas

According to the Oil and Gas Journal, Malaysia held 83 trillion cubic
feet (Tcf) of proven natural gas reserves as of January 2010. Most of
the country's natural gas reserves are in its eastern areas,
predominantly offshore Sarawak.

Sector Organization

As in the oil sector, Malaysia's state-owned Petronas dominates the
natural gas sector. The company has a monopoly on all upstream natural
gas developments, and also plays a leading role in downstream
activities and the LNG trade. Most natural gas production comes from
production sharing agreements operated by foreign companies in
conjunction with Petronas.

Exploration and Production

Natural gas production has been rising steadily, reaching 2.1 Tcf in
2009, while domestic natural gas consumption has also increased
steadily, reaching 1.0 Tcf in 2009. There are several important
ongoing projects that are expanding natural gas production in Malaysia
over the near term. Exploration and development activities in Malaysia
continue to focus on offshore Sarawak and Sabah.

Malaysia-Thailand Joint Development Area

One of the most active areas for natural gas exploration and
production is the Malaysia-Thailand Joint Development Area (JDA),
located in the lower part of the Gulf of Thailand. The JDA reportedly
holds 9.5 Tcf of proved plus probable natural gas reserves. The area
is divided into three blocks, Block A-18, Block B-17, and Block C-19,
and is administered by the Malaysia-Thailand Joint Authority (MTJA),
with each country owning 50 percent of the JDA's hydrocarbon resources
(map of the JDA). The Carigali-Triton Operating Company (CTOC), a
joint venture between Petronas Carigali and Hess, operates Block A-18,
while Blocks B-17 and C-19 are operated by the Carigali-PTTEP
Operating Company (CPOC), a joint venture of each country's national
oil company. Block B18 phase 1 came online in 2005, and in September
2009, production was reported to have reached 1 Bcf/d. Block B17 came
online in 2009. In October 2010, B17 gas shipments reportedly reached
335 Mmcf/d, with half going to Thailand and half to Malaysia

New Sarawak Natural Gas Projects

Murphy Oil announced in September 2009 the startup of several smaller
new gas fields located in Blocks SK309 and SK311. The first phase of
this project, located 137 miles offshore Sarawak, is to produce gas
from the Golok, Golok Barat, Serampeng, and Merapuh gas fields, which
are being developed in a cluster and will supply the Bintulu LNG
Terminal. It was reported in fourth quarter 2010 that gross production
had reached 250 Mmcf/d and is expected to remain at that level for 5
years. Murphy Oil holds an 85 percent interest and Petronas holds 15
percent. Murphy Oil projects that Phase 2 could produce 350 Mmcf/d for
another 10-year period when additional fields in SK311 are brought
online.

The Kumang Cluster in Block SK306, Central Luconia province, a major
gas field offshore Sarawak, is being developed by Petronas. Phase 1 is
expected to provide 500 Mmcf/d and 22,000 bbl/d of condensate to the
Bintulu Terminal when it goes online at end-2010.

Three new gas fields in Block SK 308, 124 miles offshore Sarawak, are
being jointly developed by Shell and Petronas. They are projected to
produce first gas of 90 Mmcf/d in 2012.

Pipelines

Malaysia has one of the most extensive natural gas pipeline networks
in Asia. The Peninsular Gas Utilization (PGU) project, completed in
1998, expanded the natural gas transmission infrastructure on
Peninsular Malaysia. The PGU system spans more than 880 miles and has
the capacity to transport 2 billion cubic feet per day (Bcf/d) of
natural gas.

A number of pipelines link Sarawak's offshore gas fields to the
Bintulu facility. Petronas is building the 310-mile Sabah-Sarawak Gas
Pipeline between Kimanis, Sabah and Bintulu, Sarawak to transport gas
from Sabah's offshore fields, such as Kota Kinabalu, to Bintulu for
liquefaction and export. Some of the gas will be used for downstream
projects in Sabah. This pipeline is expected to be completed by March
2011.

The Association of South East Asian Nations (ASEAN) is promoting the
development of a trans-ASEAN gas pipeline system (TACP) aimed at
linking 80 percent of ASEAN's major gas production and consumption
centers. Because of Malaysia's extensive natural gas infrastructure
and its location, the country is a natural candidate to serve as a hub
in the ongoing TACP project. The first pipeline connected Malaysia
with Singapore and was commissioned in 1991. This has been followed by
gas pipeline links between West Natuna, Indonesia and Duyong,
Malaysia, commissioned in 2002, and the Trans-Thailand-Malaysia gas
pipeline, commissioned in 2005, which allows Malaysia to pipe natural
gas from the Malaysia-Thailand JDA to its domestic pipeline system.
Other links are under development.

Exports

Malaysia was the second largest exporter of LNG in the world after
Qatar in 2009, exporting over 1 Tcf of LNG, which accounted for 12
percent of total world LNG exports. Japan, South Korea, and Taiwan
were the 3 primary purchasers. LNG is primarily transported by
Malaysia International Shipping Corporation (MISC), which owns and
operates 27 LNG tankers, the single largest LNG tanker fleet in the
world by volume of LNG carried. MISC is 62-percent owned by Petronas.

The Bintulu LNG complex on Sarawak is the main hub for Malaysia's
natural gas industry. Petronas owns majority interests in Malaysia's 3
LNG processing plants, all located at Bintulu, which are supplied by
the offshore natural gas fields at Sarawak. The Bintulu facility is
the largest LNG complex in the world, with 8 production trains and a
total liquefaction capacity of 1.1 Tcf per year. A further increment
through debottlenecking is expected by end-2010, raising overall
capacity by 0.6 Tcf per year. Japanese financing has been critical to
the development of Malaysia's LNG facilities.

Source: EIA