ROC’s initial entry into Malaysia is an important first step in pursuing the Company’s stated strategy to grow the business in South East Asia.
On 16 August 2011, Petroliam Nasional Berhad (“PETRONAS”) entered into a Risk Service Contract (RSC) for the pre-development and development of the Balai Cluster Fields with a contractor group comprising ROC, DIALOG Group and PETRONAS Carigali.
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.
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 agreed costs; either after the pre-development phase, or following successful development agreed costs will be reimbursed via the revenue stream and a remuneration fee will be paid 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 RSC contract duration is for 15 years.
Participants and interests
A joint venture company, BC Petroleum Sdn Bhd (“BC Petroelum”), was formed to operate and manage the Balai Cluster RSC. Shareholding interests in BC Petroleum are:
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Roc Oil Malaysia (Holdings) Sdn Bhd
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48%
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Dialog D & P Sdn Bhd
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32%
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PETRONAS Carigali Sdn Bhd
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20%
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A board of directors was established for BC Petroleum comprising three directors from ROC, two directors from DIALOG Group and one director from PETRONAS Carigali. On 27 September 2011, BC Petroleum’s inaugural board meeting was held and approved the work programme and budget for 2011-2012, appointed a Chief Executive Officer and established administrative procedures and controls.
Activity status
The Balai Cluster RSC has two distinct phases; the pre-development phase and the development phase leading to production. On the successful completion of the pre-development phase and agreement on the project viability of the fields, BC Petroleum 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. The total cost of the pre-development phase is estimated to be between US$200-250 million. The total cost of the development phase is estimated to be between US$650–700 million.
Pre-Development Phase
The pre-development phase of the project commenced mid-2011. Pre-development activities include geological and geophysical works, the drilling and testing of appraisal wells and the procurement of related facilities and equipment.
During the second half of 2012 the pre-development program continued with the installation of wellhead platforms successfully completed on all fields. Drilling activities commenced in September. The first well - Bentara 2, was successful and confirmed the hydrocarbon extension of the Bentara field. With the wellhead platform in place, the Bentara well will be kept as a long-term producer well. Drilling of Balai 2 concluded in mid-January 2013. Initial results indicated up to 47m net pay in the primary target and 40m net pay in the secondary target. The well was cased and completed in preparation for extended well testing. The third well, Spaoh 2, commenced drilling in January 2013.
The conversion of the Early Production Vessel (EPV) continues in Singapore and is scheduled to be deployed in the field for long-term production testing of the successful pre-development wells in 2013 after the monsoon period.
ROC’s Malaysia Strategy
The award of the Balai Cluster RSC represents an initial entry for ROC into Malaysia and the strategy is to further grow the business in the country. Roc Oil (Malaysia) Pty Limited, a wholly owned subsidiary of ROC, is pursuing other Malaysian opportunities in addition to the Balai Cluster, including: appraisal and development opportunities, including further RSCs; mature field rejuvenation projects; and shallow water exploration. The primary focus will be on opportunities that have potential synergies with the Balai Cluster RSC.
