Shell PLC is investing in Malaysia’s oil and gas sector for the second time in a month as the company and its partners, together with Petronas, seek to increase production amid a global supply shortage.
Oil and gas producers in Asia are struggling to maintain production after years of underinvestment in the sector as international companies cut production to focus on exploration and production in Africa and the Americas.
Sabah Shell Petroleum Co, a subsidiary of Shell PLC in Malaysia, together with its partners will finance the 4th stage of the Gumusut-Kakap-Geronggong-Jagus East deepwater development project. The GKGJE Phase 4 development is a subsea project that is scheduled to deliver the first oil by the end of 2024.
Shell’s partners in the GKGJE project are ConocoPhillips Sabah Ltd, Petronas Carigali Sdn. Bhd., PTTEP Sabah Oil Limited, PT Pertamina Malaysia Explorasi Produksi and others.
The GKGJE project will increase the declining production of Kimanis crude oil, Malaysia’s flagship oil export grade. Kimani production is falling due to a lack of investment and technical problems at the Gumusut-Kakap and Malikai fields.
Earlier, Petronas said that on July 31, as part of the Phase 3 project, the first oil was produced at the Gumusut-Kakap deepwater field. Gumusut-Kakap is Shell’s first deepwater development in Malaysia. The floating platform operating on it was built by Malaysian Marine and Heavy Engineering Sdn Bh.
2 new production and 2 injection wells have been drilled at the Gumusut-Kakap field. When fully completed in the 1st quarter of 2023, the four wells will add about 25 kb/d to the existing production capacity of Gumusut-Kakap.
Last month, Shell also announced an investment project with Petronas to develop the Rosmari Marjoram gas fields off the coast of Bintulu in the Malaysian state of Sarawak. According to the company, the project is designed to produce 800 Mcf/d of gas, with gas production expected to start in 2026.
The development of Rosmari-Marjoram is one of the main projects to ensure a stable gas supply to the Petronas LNG complex.
Moreover, Japan is eyeing Malaysian LNG. On September 30, the Ministry of Economy, Trade, and Industry of Japan agreed with the Malaysian company Petronas to increase the supply of liquefied natural gas in the event of an emergency or disruption in the supply of energy resources.
In addition, the parties will consider the possibility of joint investments in the production of LNG, as well as discuss the joint use of storage tanks. Japan, for its part, will work with Malaysia to reduce emissions into the atmosphere.
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