Coastal Energy Thursday said it has entered into an agreement – a Small Field Risk Service Contract – with Malaysia’s Petronas for the development and production of petroleum from the Kapal, Banang and Meranti, or KBM, cluster of small fields offshore Peninsular Malaysia.
Coastal will be the operator of the KBM Cluster and is currently finalising an arrangement for a Malaysian company to participate in the RSC for 30-40 percent equity interest, the Thailand-focused oil and gas independent said in a statement.
The RSC is a development model that Petronas implemented last year in an effort to shore up Malaysia’s dwindling production by encouraging development of marginal fields. Marginal fields typically have under 30 million barrels of reserves.
Under the terms of the RSC, Coastal will provide the upfront development capital, undertaking the development drilling and production of the KBM Cluster, while Petronas will remain the owner of the project.
Subject to its performance, Coastal will recover its capital and operating expenditures and will be paid a remuneration fee, which will be adjusted by key performance indicators based on the timely implementation of the agreed field development plan and budget, the company said.
“We are proud to announce this new contract with Petronas. The KBM Cluster has similar characteristics to our existing fields offshore Thailand and we are confident that our experience and expertise in developing smaller fields quickly and efficiently will prove valuable,” Coastal Energy President and CEO Randy Bartley said in a statement.
First oil from the Kapal field is scheduled within one year followed by production from the Banang field a year later, Coastal said. The company did not give any production estimates for the fields.
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 17 wells will be drilled with 10 planned at Kapal, four at Banang and three at Meranti.
The KBM cluster fields are located within 20 km of each other in a water depth of 60 meters.
This is Petronas’ third RSC. The first RSC was awarded to a consortium of London’s Petrofac, SapuraCrest and Kencana Petroleum for the Berantai field while Australia’s Roc Oil and Malaysian company Dialog won the second for the Balai cluster of oil fields offshore Sarawak.
Petronas has estimated that Malaysia has 106 marginal oil fields containing 580 million barrels of oil.
Coastal Energy is registered in the Cayman Islands and has offices in Houston and Thailand. The company’s operations are focused in Thailand, where it has two concessions in the Gulf of Thailand and interests in four concessions onshore in the northeastern part of the country.