Saturday July 7, 2012
Coastal Energy signs contract with Petronas
PETALING JAYA: Coastal Energy Co has entered into a small field risk service contract (RSC) with Petroliam Nasional Bhd (Petronas) for the development and production of petroleum from the Kapal, Banang and Meranti cluster of small fields offshore Peninsular Malaysia.
Coastal (with 100% equity interest under the small field RSC) would be the operator of the cluster fields. In accordance with the RSC, the company is also finalising an arrangement for a Malaysian company to participate in the contract for 30% to 40% equity interest.
According to Coastal's website, the company would provide the upfront development capital, undertaking the development drilling and production of the fields. Petronas will remain the owner of the project.
Coastal's president and chief executive officer Randy Bartley said in a statement that the contract was a significant step as the cashflow from existing production (from fields offshore Thailand) would be used to diversify the company's portfolio.
“We are happy to have Petronas as a partner and are looking forward to working with it on this and potential future projects,” he added.
Subject to its performance, Coastal would recover its capital and operating expenditures and would be paid a remuneration fee, which would be adjusted by key performance indicators (KPIs) based on the timely implementation of the agreed field development plan and budget.
The company expects first oil from the Kapal field within one year followed by production from the Banang field a year later.
Coastal will develop the fields using mobile offshore production units and floating storage and offloading tankers similar to the method used to develop its assets offshore Thailand.
A total of seventeen wells will be drilled with ten planned at Kapal, four at Banang and three at Meranti.
Meanwhile, CIMB Research analyst Norziana Mohd Inon said in a report that companies which had expressed interest to work with Coastal include Petra Energy Bhd and TH Heavy Engineering Bhd (formerly Ramunia).
Malaysia Marine and Heavy Engineering Bhd has also been cited as a contender but we understand that marginal field development is not a priority for the company at the moment,” she said.