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 Small Field Risk Service Contract (SFRSC) 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 60m.
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 SFRSC contract duration is for 15 years.
Participants and interests
A joint venture company, BC Petroleum Sdn Bhd (“BC Petroelum”), has been formed to operate and manage the Balai Cluster SFRSC. 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 has been 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 SFRSC 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 has commenced 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. Activities undertaken by BC Petroleum during 3Q 2011 included: recruitment of staff; establishment of work systems; and the commencement of tendering for contracts. Activities undertaken by BC Petroleum in 4Q 2011 included: site surveys and soil boring of offshore field locations in preparation for drilling and platform installation; field sampling for the EIA study; reprocessing of seismic data and commencement of data interpretation; tendering and awards for equipment and services, such as fabrication of wellhead platforms; and the agreement to purchase a vessel for conversion into an early production vessel.
ROC’s Malaysia Strategy
The award of the Balai Cluster SFRSC 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 SFRSCs; mature field rejuvenation projects; and shallow water exploration. The primary focus will be on opportunities that have potential synergies with the Balai Cluster SFRSC.
