Saint Joseph Platform, Sabah
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) has given the go-ahead for partner Royal Dutch Shell to sell its (Shell’s) 50% stake in their joint-venture North Sabah enhanced oil recovery (EOR) project to Hibiscus Petroleum Bhd
. However, the approval is subject to certain conditions.
Hibiscus told Bursa Malaysia that Shell’s units Sabah Shell Petroleum Co Ltd and Shell Sabah Selatan Sdn Bhd - which hold the combined 50% interest - were reviewing the conditions.
“If further clarifications are required from Petronas in respect of these conditions, these will be sought in due course and the company (Hibiscus) will make further announcements, if appropriate,” it said.
Hibiscus did not disclose the conditions imposed by Petronas.
Petronas’ unit Petronas Carigali Sdn Bhd is Shell’s joint-venture partner in the North Sabah EOR production sharing contract (PSC) signed in January 2012. It was part of “the world’s biggest EOR project” at the time, which also included EOR development off the shores of Sarawak (nine oil fields in the Baram Delta),
Hibiscus, which would become the operator of the PSC and under the joint operating agreement if the sale was completed, would be responsible for managing the petroleum production from four existing producing oil fields off Sabah.
It would also take the managerial responsibility for the existing pipeline infrastructure, the Labuan Crude Oil Terminal and all other equipment and assets related to the PSC.
To recap, Hibiscus’ indirect unit SEA Hibiscus Sdn Bhd signed a conditional agreement in October last year to buy a 50% stake from the two Shell units for US$25mil (RM106.9mil) and assume the role of operator. Petronas Carigali Sdn Bhd holds the remaining 50% in the PSC and JOA.
The PSC expires on Dec 31, 2040.
Among the conditions precedent is Shell’s receipt of Petronas’ unconditional approval under the PSC for the sale of Shell’s entire interest to Hibiscus or on fulfilment of conditions reasonably acceptable to Hibiscus and/or Shell.
Shell’s agreement with Hibiscus may be terminated by each party if the conditions precedent are not met or otherwise waived by mutual consent of the parties within 18 months from the agreement’s execution.
Hibiscus had in October last year said it expected the proposed acquisition to be completed by the end of the second quarter of this year (next month).
Hibiscus, citing a report by independent technical valuer RISC Operations Pty Ltd, said the North Sabah EOR fields were producing over 16,000 barrels of oil per day and had an estimated remaining developed reserves of 62 million barrels as of April 2016.
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