By DayakDaily Team
KUCHING, April 29: United States oil giant ConocoPhillips has reportedly withdrawn from a RM13.7 billion deepwater oil and gas project off the coast of Sarawak, citing a “country strategy review” as the reason.
According to Channel News Asia (CNA), the company’s decision to exit the Salam-Patawali project, a 50-50 joint venture with national oil company Petroliam Nasional Berhad (PETRONAS), was first reported by Upstream Online on April 15.
The Salam-Patawali block spans 300,000 net acres in the Salam and Benum fields off southern Sarawak. Although a 3D seismic survey was completed in 2023, evaluation efforts have reportedly ceased.
Industry sources close to ConocoPhillips confirmed the pullout to CNA but did not elaborate further on the strategy shift. Attempts by CNA to reach ConocoPhillips’ executives in Kuala Lumpur were unsuccessful.
Industry insiders believe the exit is also linked to the regulatory uncertainty caused by tensions between PETRONAS and the Sarawak government, which owns State oil and gas firm Petroleum Sarawak Berhad (Petros).
Sarawak is pushing for more control over its resources, challenging PETRONAS’ decades-old monopoly established under the Petroleum Development Act (PDA) 1974.
The Sarawak government contends that the PDA does not apply to the State and insists that oil and gas in its waters fall under the Oil Mining Ordinance (OMO) 1958 as stipulated under Malaysia Agreement 1963 (MA63). Sarawak currently holds over 60 per cent of Malaysia’s proven petroleum reserves and accounts for 90 per cent of the nation’s liquefied natural gas (LNG) exports.
Sources say ConocoPhillips now plans to focus on operations in neighbouring Sabah, where it already has a presence. The company’s April 2024 factsheet shows it holds exploration and production interests across 2.7 million net acres in Malaysia, all in partnership with PETRONAS.
CNA highlighted that this development adds to growing complexities facing Sarawak’s oil and gas sector. In February, Thailand’s PTTEP was reported to have suspended its final investment decision on the US$6 billion Lang Lebah gas project, also off Sarawak, until next year to re-engineer the project for better viability.
Meanwhile, the PETRONAS-Petros feud has spilled into the courts. In October, Petros filed a legal challenge against PETRONAS over a RM7.05 million claim tied to a 2019 gas sales agreement, arguing the agreement was invalid under Sarawak’s 2016 Distribution and Gas Ordinance.
In another case, Shell’s Malaysian subsidiary secured an interim injunction from the Kuala Lumpur High Court in January, allowing it to continue operations while the broader PETRONAS-Petros dispute is resolved. — DayakDaily
