Chairman Tan Sri Shahril Shamsuddin(pic) said at least 12 new drilling campaigns are being planned in SK408 block, located within the productive gas region of Central Luconia

KUALA LUMPUR: Buoyed by recent success, SapuraOMV Upstream Sdn Bhd and its production sharing contract (PSC) partners are stepping up efforts to find new gas in shallow waters offshore Sarawak.

Chairman Tan Sri Shahril Shamsuddin said at least 12 new drilling campaigns are being planned in SK408 block, located within the productive gas region of Central Luconia.

“We are still making new discoveries in the SK408 block, ” he said.

SapuraOMV, in which SAPURA ENERGY BHD  is a 50% shareholder, has a 40% equity interest in the SK408 PSC.

The other partners are Petronas Carigali Sdn Bhd and Sarawak Shell Bhd, each with a 30% stake.

The SK408 is targeted to produce its first gas by the end of the year, with production from the first three fields – Gorek, Larak and Bakong – expected to reach 400 million standard cubic feet (mmscf) a day next year.

The three fields are expected to remain productive for the next 20 years.

On Friday, SapuraOMV and its partners signed the full-term gas sales agreement (UGSA) with Petroliam Nasional Bhd (Petronas) for the three fields. Under the UGSA, the gas will be supplied to Petronas’ liquefied natural gas (LNG) complex in Bintulu.The second phase of the development, which involved the production from new gas fields within the SK408 PSC will add around 600mmscf to its output.

Production from these new fields is expected to start in 2023.

In June this year, Petronas’ gas and new energy boss Adif Zulkifli told StarBiz that Malaysia is targeting to increase its annual gas production by 1,000 mmscf, or 12.5% by 2025 from the current 8,000 mmscf.

It is likely that the new gas supply would come mainly from the SK408 project.

“With the combined production, we will be a significant supplier to the LNG market, ” Shahril said.

The first phase of the SK408 gas project is a significant milestone for SapuraOMV and its partners.

This is considering that that final investment decision on the project was made barely two years ago.

“The first phase of the SK408 development was done below budget, ahead of schedule and most importantly, without incidents, ” its CEO Muhammad Zamri Jusoh said at a press conference on Friday.

Buoyed by the success, Shahril said the company has set an ambitious plan for at least 12 drilling campaigns to find new gas in the area.

SapuraOMV currently produces 10,000 barrels of oil equivalent a day (Boe/d). Next year, production will triple to 30,000 Boe/d.

The company has a target to grow its production to 100 Boe/d within the next six years.

The Gorek, Larak, and Bakong fields are part of the discoveries made by SapuraOMV during its 2014 drilling campaign.

SapuraOMV is the operator of the Larak and Bakong fields, while Sarawak Shell is the operator of Gorek field.

Apart from SK408, SapuraOMV also has exploration interests in Mexico, Australia and New Zealand.

SapuraOMV is a joint venture between Sapura Energy Bhd and OMV Exploration & Production GmbH.

The deal to supply gas to Petronas will improve SapuraOMV’s cashflow visibility for the next 20 years, with a positive impact on its parent company.

Shahril, who is also the president and group CEO of Sapura Energy, said the LNG market is expected to remain robust in the coming years, underpinned by strong demand for cleaner power source.

But the sale of gas from the three fields will deliver higher earnings to Sapura Energy, the market, however, remained cautious about the company’s near term prospect after a disappointing first quarter ended April 30.

Shares in Sapura Energy fell 1 sen on Friday to 27 sen, near its all-time low.