Bright future ahead with CA1, CA2

Photos: Agencies, Courtesy of Brunei Shell Petroleum, Graphics by BT/Ayi Hermala

Thursday, March 24, 2011

MOVING forward the next 10 to 20 years, Brunei's main source of oil and gas will most likely be from the highly prospective deepwater offshore blocks, claims PetroleumBRUNEI.

Brunei National Petroleum Company Sdn Bhd (PetroleumBRUNEI) believes that the prospectivity of the blocks are "very promising", Managing Director Azren Taib said in an interview with The Brunei Times.

Azren however cautioned that the prospectivities of the blocks would only be confirmed once drilling of the first few exploratory wells are made.

When asked regarding the government's share should CA1 see commercialisation, Azren said that the deal that has been reached is a good one where Brunei will take its share of taxes, royalties and incomes as per the mechanics of the Production Sharing Contract (PSC) and that the overall deal will not be far apart and likely similar to the government's arrangement with Brunei Shell Petroleum (BSP). The PSC is an improvement from the concession agreement.

"Drilling in CA1 will commence within the third quarter of this year. When that begins, we will know better as to whether or not we will meet the target of drilling three exploration wells this year," he added.

At this juncture, based on the available data gathered, the resource volumes are promising, Azren said, further stating that the thing about the oil and gas industry is that, it's a business which requires patience and perseverance, skill and a bit of luck.

"You can only know what you have after drilling and what happens after is (based on that)," said the managing director. He also maintained that the signing of both blocks CA1 and CA2 were historic events and heralds the beginning of a new frontier for Brunei Darussalam's oil and gas industry.

As for the period it takes to hit commercialisation, Azren said that it depends on the results of the exploration phase and other factors and decisions moving forward but the aspiration is to do it in a safe and speedy manner.

"The two blocks CA1 and CA2, in terms of prospectivity, will keep us busy for a long time. These two blocks are not small. We will begin with drilling the exploration wells and once there is a discovery, we will begin appraisal for development in the near future," he said.

As for the immediate plans for Block CA2, PetroleumBRUNEI's is aiming to accelerate activities with the aim of drilling a well in that block this year as well.

"It depends on many factors but we're optimistic of drilling one well this year," he added.

"We are surely and steadily moving forward and the picture promises a bright future ahead for Brunei," he said.

"The coming months will see us take concrete steps forward, bringing us closer to a prosperous future in line with the nation's wishes and aspirations," Azren stated with optimism.

Total currently has a 54 per cent interest in Block CA1. BHP Billiton's stake has been shrunk to 22.5 per cent from 25, and Hess from 15 per cent to 13.5. This frees up a 10 per cent stake to be taken up by newcomers Petronas and Canam Brunei.

As for CA2, the breakdown was between Shell Deepwater Borneo (with a 50 per cent stake), Mitsubishi (with 25 per cent), and ConocoPhillips (with 25 per cent). Murphy Oil on December 13, 2010, said that its wholly owned subsidiary, Canam Brunei Oil Ltd, had entered into a production sharing deal with PetroleumBRUNEI for interests in offshore Block CA2.

Murphy will hold a 30 per cent working interest in Block CA2.

The Brunei Times