Business

Published: Monday March 16, 2009 MYT 2:52:00 PM

Malaysia and Brunei settle 6-year oil territory spat


BANDAR SERI BEGAWAN, Brunei: Malaysia and Brunei sealed a pact Monday to settle a maritime territorial dispute that has blocked the exploration of rich offshore oil reserves off Borneo island for six years.

Brunei's Sultan Hassanal Bolkiah and Malaysian Prime Minister Abdullah Ahmad Badawi signed the agreement at a ceremony in Hassanal's palace to resolve the spat that has been an irritant to the neighbors' warm bilateral ties.

Both Malaysia and Brunei awarded exploration contracts to parts of an undersea site with potentially large oil reserves several years ago.

But exploration activities have since stalled because the countries discovered that some of the areas overlap.

Malaysia's national oil-and-gas company Petronas awarded two offshore sites to U.S.-based Murphy Oil Corp. in 2003.

But Brunei awarded nearly identical blocks around a year earlier to consortiums led by Royal Dutch Shell and France's Total SA.

Both sides are expected to cooperate on the exploration and exploitation of the sites, Foreign Minister Rais Yatim indicated last week, though it is not immediately clear when those activities could resume.

Brunei especially relies heavily on oil and gas export revenue to prop its economy.

Oil and natural gas-rich zones lie off the coasts of Brunei and Malaysia's states of Sabah and Sarawak on Borneo island.


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