Brunei may soon start drilling in Blocks J and K


BRUNEI can start drilling soon in offshore Blocks J and K as the Sultanate retains ownership of the two blocks under a deal made last year with the Malaysian government.

Second Minister of Foreign Affairs and Trade Pehin Orang Kaya Pekerma Dewa Dato Seri Setia Lim Jock Seng during a telephone interview yesterday confirmed this, adding that "this has been sorted out during last year's agreement and is nothing new".

Asked whether Brunei can start drilling in the offshore blocks soon, Pehin Dato Lim said "Yes".

US-based Murphy Oil Corporation released a press statement yesterday saying that Petroliam Nasional Bhd (Petronas) has terminated its production sharing contracts of Blocks L and M (referred to as Blocks J and K in Brunei) as the two blocks are no longer part of Malaysia.

"Following the execution of the Exchange of Letters between Malaysia and Brunei on March 16, 2009, the offshore exploration areas designated as Block L and Block M are no longer a part of Malaysia," the statement added.

Yves Grosjean, general manager of Total E&P Borneo BV and Total E&P Deep Offshore Borneo BV, in a telephone interview with The Brunei Times explained that Malaysia refers to Brunei's Blocks J and K as Blocks L and M.

"This could be very good news for us if what Murphy Oil writes is correct, Blocks J and K could be under Brunei's sovereign," he said, adding that they are awaiting more developments on the matter.

Grosjean also said that Brunei's Block J was previously commissioned to Murphy Oil under Petronas, but wasn't sure about Block K.

According to the petroleum map from the Brunei's Petroleum Unit, Block K was awarded in 2003 to a consortium made up of Shell Deepwater Borneo, Mitsubishi and ConocoPhilips.

During last month's State Legislative Council, Pehin Dato Lim said that Brunei and Malaysia would start talks to resolve the land border demarcation issue in April.

Pehin Dato Lim also noted the recent establishment of a joint technical committee that would finalise the formalities of the boundary demarcation.

The modalities of the final demarcation of land boundaries were included in the Letters of Exchange (LoE), signed by leaders of both countries in March last year. The LoE was intended to settle the long-standing land and maritime boundary issues between the two countries.

Grosjean in a previous interview said that Block J is projected to produce more than 150,000 to 200,000 barrels per day, adding that the magnitude of this growth would mean doubling oil production in Brunei.

"I think we are lucky. I'm very pleased (that Total was) chosen by the Bruneian government to explore Block J initially and we are pleased to have this relationship. Situations where there are disputed areas are not uncommon, especially in the oil industry or related to hydrocarbons. In actual fact, it usually takes a long time to come to a solution and the fact that we are about seven years into this situation, with positive signs of a conclusion this year, is something commendable for the Bruneian and Malaysian governments," he said, adding that working to an agreeable solution is not so common elsewhere in the world.

The Malaysian Embassy in Brunei could not be reached as of press time.The Brunei Times

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