Shell completes sale of North Sabah PSC
Malaysia continues to be an important country for Shell.
KOTA KINABALU: Shell has completed the sale of its 50 per cent equity interest in the 2011 North Sabah EOR Production Sharing Contract (PSC) in Malaysia to SEA Hibiscus Sendirian Bhd (SEA Hibiscus), an indirect wholly owned subsidiary of Hibiscus Petroleum Bhd (Hibiscus Petroleum).
The PSC encompasses the Labuan Crude Oil Terminal (LCOT), and the fields of St Joseph, South Furious, SF30 and Barton, all located offshore Sabah, Malaysia.
To recap, SEA Hibiscus had on October 12, 2016 entered into a conditional sale and purchase agreement (SPA) with Sabah Shell Petroleum Company Ltd and Shell Sabah Selatan Sdn Bhd to acquire Shell’s participating interests in the PSC between Petroliam Nasional Bhd (Petronas), Shell and Petronas Carigali Sdn Bhd (Petronas Carigali), and the JOA between Shell and Petronas Carigali for the total purchase consideration of US$25 million.
The North Sabah PSC includes 20 offshore platforms across four producing fields located in the South China Sea, off the west coast of Sabah, and the Labuan Crude Oil Terminal located in the Labuan Federal Territory, in Malaysia.
The fields have been producing since 1979 and the PSC provides the Group with operatorship and production rights up to 2040.
According to Shell in a statement, with this completion, SEA Hibiscus Sendirian Bhd will have a 50 per cent equity stake and operatorship of the PSC and its assets. Petronas Carigali Sdn Bhd is a partner with 50 per cent equity in the said PSC.
This transaction is part of Shell’s review of its Upstream portfolio, to focus on acreage positions that hold or can reach the scale required by Shell.
“Malaysia continues to be an important country for Shell,” it highlighted in a statement.
“Shell’s Sabah portfolio is contributing significantly to Malaysia’s economy through deep-water projects like Gumusut-Kakap and Malikai, and remains committed to further exploration in Malaysia.
“Shell is also the leading retail fuels and lubricants provider and continues to invest in growing these businesses in the country.”
Meanwhile, in a separate statement, Hibiscus Petroleum chairman, En Zainul Rahim said the North Sabah PSC constitutes its second producing asset, providing the Company with another revenue stream after the Anasuria Cluster.
“It is an exciting time for Hibiscus Petroleum as we expand and strengthen our technical and operating capabilities, profitability and balance sheet.
“This is an example of Hibiscus Petroleum’s strategy to grow shareholder value by focusing our activities on assets where we believe we can offer a unique value proposition to enhance production from mature assets in regions of our geographic focus.”
Furthermore, the North Sabah PSC will significantly boost the Group’s production and proven and probable reserves (2P Reserves).
On a 100 per cent PSC basis, the total oil production averaged approximately 14.6 kbbls/day in 2017, with 2P Reserves and contingent oil resources (2C Resources) as of 1 January 2018 at approximately 40.9 mmbbls and 79 mmbbls, respectively.
Having met all the conditions precedent under the SPA, the transfer of operatorship from Shell to SEA Hibiscus concluded on 31 March 2018 and SEA Hibiscus thereby assumed the role of operator of the North Sabah PSC. As operator, SEA Hibiscus will be responsible for the day-to-day operations and management of the work activities of the assets within the North Sabah PSC.
“We are pleased to welcome the highly capable team which has transferred from Shell to SEA Hibiscus and look forward to working closely with PETRONAS and PETRONAS Carigali to maximise the economic value of this asset.
“Whilst we are excited to develop the opportunities that have been identified to realise the considerable potential within the North Sabah PSC fields, our focus will be to improve the performance of the asset in a safe and environmentally responsible manner,” said Dr Pascal Hos, chief executive officer of SEA Hibiscus.
Shell