Malaysia to embark on world's biggest recovery oil plan

PUTRAJAYA, Malaysia - Malaysia will embark on the world's biggest enhanced oil recovery (EOR) project, which is poised to create ripple effects of national importance, said Prime Minister Datuk Seri Najib Razak.

Najib said the RM38 billion (S$15.5 billion) project, an offshore joint-venture between Petronas and Shell Malaysia that will last 30 years, would lead to the building of local capabilities in a niche technology area.

It would also increase the average recovery factor in the Baram Delta and North Sabah fields to about 50 per cent, he added.

The improvement in the recovery efficiency of the oil fields, said Najib, was expected to have a positive impact on the country's oil reserves and benefit Malaysia as a whole.

He said if the technology employed in the North Sabah fields was successful, it could lead to the world's first offshore Alkaline Surfactant Polymer EOR project using horizontal wells.

"I am confident that this landmark undertaking will prove another significant milestone, not only for Petronas but for Malaysia's development as well," Najib said.

He added that the technology would be able to extend the fields' life to beyond 2040.

He said this after witnessing the signing of the production-sharing contracts between Petronas, Sarawak Shell Bhd, Sabah Shell Petroleum Company Limited, Shell Sabah Selatan Sdn Bhd and Petronas Carigali Sdn Bhd here yesterday.

The contracts build upon two existing production-sharing contracts for fields in the Baram Delta operations area and North Sabah, where oil has been produced for decades using primary and secondary recovery techniques.

Najib was hopeful that the national oil company's track record and Shell's technological expertise in EOR would greatly benefit Malaysia's industrial development.

He said as the oil, gas and energy sector, which contributed 20 per cent of the national gross domestic product, was the bastion of Malaysia's growth, the nation had to pursue sector-wide opportunities to reach its annual growth target and provide a sustainable energy platform.

The rejuvenation of existing fields through EOR, he added, was one of 19 entry-point projects that would provide additional supplies for Malaysia's power and industrial needs, and promote organic growth in the oil, gas and energy sector.

"In light of this challenge to sustain current production levels due to the maturing fields, the agreement today signifies the commitment by the parties to intensify focus in sweating our hydrocarbon assets by maximising recovery through diligent reservoir management and the pursuing of EOR potential."

The project, Najib added, was a bold undertaking by Petronas to unlock greater resource potential for Malaysia.

Petronas president and chief executive officer Datuk Shamsul Azhar Abbas said the introduction of EOR would see the unlocking of significant volumes of the remaining hydrocarbons in the Baram Delta and North Sabah oil fields, which have already produced 1.7 billion stock tank oil barrels to date.