Tuesday 14 December 2010

Malaysia and Brunei resolve oil block row

Malaysian PM Najib with Bruneian Sultan Hassanal


Malaysia and Brunei signed a deal on 13th December to jointly develop two oil areas off Borneo, ending a border dispute dating from 2003 which had held up exploration.

The agreement will see the national oil firms of Malaysia and Brunei take part in exploration and production in the potentially oil-and-gas rich blocks, Malaysian state news agency Bernama said.

In the ceremony on Monday, Petronas and Petroleum BRUNEI signed a production sharing agreement (PSA) for Block CA2, with a lifespan of 40 years.

The signing ceremony in Brunei was witnessed by Brunei's Sultan Hassanal Bolkiah and Malaysian Prime Minister Najib Razak.

Brunei, a small monarchy surrounded by Malaysia's eastern states of Sarawak and Sabah, awarded exploration rights in one offshore block to French oil firm Total and another to Shell.

But Malaysia's state-owned Petronas awarded the same sites to US firm Murphy Oil and its own subsidiary, Petronas Carigali.

In a bid to end the spat, the two countries agreed in March last year that the disputed areas "are no longer part of Malaysia" but allowed Petronas to enter into new production sharing contracts.

In September 2010, the two countries agreed to jointly develop Block CA1.

After the signing ceremony on Monday, Najib said the percentage sharing agreement was still being discussed. He also said that he hoped joint demarcation and survey of the land boundary between the neighbours could be carried out next year.

Sources: Rigzone, Bernama, NNN


For more information on the Malaysia-Brunei offshore oil dispute, see menas borders.

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