Wednesday, 12 October 2016 | MYT 7:45 PM
BY M. HAFIDZ MAHPAR
KUALA LUMPUR: Shell has reached an agreement to sell its 50% equity interest in the 2011 North Sabah enhanced oil recovery (EOR) production sharing contract (PSC) to Hibiscus Petroleum Bhd’s indirect unit SEA Hibiscus Sdn Bhd for US$25mil (RM104.8mil).
The amount excludes post completion adjustments and reimbursements to Shell.
Currently, Sabah Shell Petroleum Co (25%) is the operator, partnering with Shell Sabah Selatan (25%) and Petronas Carigali Sdn Bhd (50%) in the PSC, which includes the Labuan Crude Oil Terminal, and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah.
Total oil production (on a 100% PSC basis) averaged 18 kilobarrels (kbbls) per day last year, according to statements from Shell and Hibiscus.
“This transaction is part of Shell’s review of its Upstream portfolio, to focus on acreage positions that hold or can reach the scale required by Shell,” Shell said.
Hibiscus, meanwhile, said the PSC provided long-term production rights until 2040 with identified future development opportunities.
“This acquisition is in line with the growth strategy of the group to invest in profitable development and producing business operations in our identified core geographical areas of interest. It also provides the group with immediate access to proven and probable oil & gas reserves with future potential upside,” said Hibiscus managing director Kenneth Pereira.
The transaction is expected to be completed in 2017, subject to getting the approval of Petroliam Nasional Bhd and Shell’s partner Petronas Carigali. With the completion, SEA Hibiscus Sdn Bhd will have a 50% equity stake and operatorship of the PSC and its assets.
In its statement, Shell gave the assurance that Malaysia continued to be an important country for the group.
“Shell’s Sabah portfolio is contributing significantly to Malaysia’s economy through deep-water projects like Gumusut-Kakap and Malikai. Shell continues to bring in significant foreign direct investment and transfer of technology into the country to nurture and develop local capability to unlock Malaysia’s deep-water potential,” it said.