ExxonMobil to expand downstream

KUALA LUMPUR: ExxonMobil Corp is expanding its downstream retail network in Malaysia, but says that tough fiscal terms have kept it from prospecting for crude in the country’s deepwater areas. 

In a recent interview with Reuters, the company said it aimed to add six to 12 service stations each year to its network in Peninsular Malaysia although it was still weighing the risk reward payoff of exploration. 

Rob Fisher

ExxonMobil subsidiaries in Malaysia chairman Rob Fisher said: “We regard the growth markets in Peninsular Malaysia as very attractive on a worldwide basis.” 

ExxonMobil currently has a network of 570 service stations across the country. 

Fisher said ExxonMobil's decision to explore deepwater sites would depend on the fiscal terms received.  

“Petronas' incentive is to give us as little as possible, just give us enough to make it attractive, yet we've taken all the risk. 

“So before we take the risk we want to know what the terms are, and we're looking at both the downside and the upside,” said Fisher. 

The wire agency noted that Petroliam Nasional Bhd (Petronas) planned to drill 10 exploration wells off Borneo this year in search of the eight billion barrels of oil equivalent it believes are lurking in deepwater basins. 

“You're not so much assessing technical prospectivity as you are economic prospectivity,” Fisher said, explaining why the company had no deepwater acreage at the moment. 

“We had opportunities made available to us. We haven't found them, at this time, sufficiently attractive, but that doesn't mean that we won't in the future, and we continue to evaluate everything that comes our way.”  

Malaysia has a total of 570,000 sq km of exploration acreage with 66 exploration blocks, Petronas says, and its deepwater basins have a success rate of two in every three wells drilled. 

An aerial view of Guntong E (third from left)

Murphy Oil's Kikeh field will start production in the fourth quarter next year with reserves of 400 million to 700 million barrels and Royal Dutch Shell's Gumusut will pump 150,000 barrels per day (bpd) from 2011. Both fields lie off the coast of Sabah. 

ExxonMobil's downstream activities include an 88,000bpd oil refinery in Port Dickson on the peninsula's west coast and eight product distribution terminals, Reuters said. 

Meanwhile ExxonMobil unit ExxonMobil Exploration and Production Malaysia Inc (EMEPMI) said in a statement it has started operations at the Guntong E gas compression platform in a move to help meet the increasing gas demand in the country. 

EMEPMI said Guntong E was developed under the gas production-sharing contract (GPSC) between EMEPMI as the operator and co-venturer Petronas Carigali Sdn Bhd. 

Each company holds a 50% participating interest in the GPSC. 

Fisher said the development of Guntong E was committed to ensuring reliable gas supplies and providing technological advances and international best practices to the company's operations. 

“The development of Guntong E is key to meeting Malaysia's rising energy needs in the coming decades. The start-up of this project will position us to embark on several future gas resource development commitments under our GPSC with Petronas,” he said in the statement. 

Initially funded at RM1bil, the Guntong E project was completed with a significant cost saving of 13%. 

The platform is the first phase of the Guntong Hub development, which is anticipated to produce and process a total of over four trillion cu ft of gas for sale in Peninsular Malaysia.