ROC Awarded Small Field Risk Service Contract in Malaysia

abarrelfullabarrelfull wrote on 10 Aug 2014 08:27
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17 August 2011

Petroliam Nasional Berhad ("PETRONAS") has entered into a Small Field Risk Service Contract ("SFRSC") for the pre-development and development of the Balai Cluster Fields, located offshore Sarawak, with a contractor group comprising Roc Oil Malaysia (Holdings) Sdn Bhd, a wholly owned subsidiary of ROC, Dialog D & P Sdn Bhd, a wholly owned subsidiary of Dialog Group Bhd ("DIALOG Group") and PETRONAS Carigali Sdn Bhd ("PETRONAS Carigali"). Participating interests in the contractor group are ROC 48%, DIALOG Group 32% and PETRONAS **Carigali 20%. ROC, Dialog and PETRONAS Carigali intend to form an incorporated joint venture company ("JVC") to manage the SFRSC.

Balai Cluster Fields
The Balai Cluster comprises a cluster of marginal oil and gas fields in the areas around the Balai and West Acis discoveries, which are located offshore Sarawak in water depths of approximately 60 metres.

Small Field Risk Service Contracts
A Risk Service Contract is a new petroleum arrangement PETRONAS is implementing in Malaysia. This model strikes a balance in sharing risks with fair returns for development and production of discovered marginal fields. In this arrangement, PETRONAS is the project owner while the contractor is the service provider. Upfront investment of the capital will be contributed by the contractors. The contractor group shall be compensated accordingly with reimbursement of costs plus a remuneration fee for services rendered. The remuneration fee is based on oil and gas production, as well as the contractor group meeting key performance indicators. Payment to contractors shall commence upon first production and be paid throughout the duration of the contract. The SFRSC contract duration is for 15 years.

Planned Activity
The Balai Cluster SFRSC has two distinct phases. The pre-development phase is scheduled to commence in 2H 2011 and is expected to take up to 18 months. Pre-development activities are planned to include geological and geophysical works, the drilling and testing of appraisal wells and the procurement of related facilities and equipment. The total cost of the pre-development phase is estimated to be between US$200-250 million.

ROC presently considers that future cashflows, the existing debt facility, as well as potential project financing
through the JVC will adequately fund the capital costs associated with the pre-development phase for the
Balai Cluster.

On the successful completion of the pre-development phase and agreement on the project viability of the
fields, the contractor group will submit a field development plan for all or some of the fields and progress to
the development phase. Production from all the fields in the cluster is planned to be online within 24 months
from commencement of the development programme. Development activities are planned to include the
drilling of wells, the installation of platforms, topsides and pipelines, and the tie-in of the new facilities to
existing PETRONAS Carigali infrastructure as appropriate. The total cost of the development phase is
estimated to be between US$650–700 million.


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