Petronas agrees terms for Balai Cluster development project offshore Malaysia

Offshore staff

SYDNEY, Australia – Petronas Carigali has entered into a Small Field Risk Service Contract (SFRSC) for pre-development and development of the Balai Cluster fields offshore Sarawak.

These are marginal oil and gas discoveries in the area of the Balai and West Acis discoveries, in water depths of around 60 m (197 ft).

The development consortium comprises Petronas (20%), Roc Oil Malaysia (48%), and Dialog D & P (32%), a subsidiary of the Kuala Lumpur-base technical services provide Dialog Group. The trio plan to establish an incorporated joint venture company to manage the SFRSC.

A Risk Service Contract is a new arrangement Petronas is implementing in Malaysia, designed to strike a balance between sharing risks and fair returns for development and production of discovered marginal fields.

Petronas is the project owner while the contractor/contractor group are the service provider, contributing upfront investment of the capital. They in turn are compensated via reimbursement of costs plus a remuneration fee for services rendered, with payment starting on commencement of production and continuing throughout the duration of the SFRSC, which lasts for 15 years.

Pre-development of the Balai Cluster is due to begin later this year, and last up to 18 months. Activities will likely include geological and geophysical studies, drilling and testing of appraisal wells, and procurement of related facilities and equipment, at a total cost of $200-250 million.

On completion of the pre-development phase and agreement on the project viability, the contractor group will submit a development plan for all or some of the fields and progress to the development phase.

Production from all fields in the cluster should start within 24 months from commencement of the development activities, which will include drilling of wells, installation of platforms, topsides and pipelines, and tie in of the new facilities to existing Petronas infrastructure where appropriate. The estimated total cost of the development phase is $650–700 million.


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