OREANDA-NEWS. May 30, 2012. PETRONAS has signed a new Production Sharing Contract (PSC) with Talisman Malaysia Ltd and PETRONAS Carigali Sdn Bhd for the continuing production, further development and improved recovery of crude oil from the Kinabalu Fields, a number of fields with matured reservoirs located offshore Sabah, East Malaysia.

The PSC is the first awarded under the new, innovative Progressive Volume-Based (PVB) fiscal terms designed by PETRONAS to offer value-added incentives for the development and production of matured oil fields in Malaysia. In particular, the PVB terms provide progressive profit sharing to provide incentive to contractors to improve oil recovery and increase production as the risks of developing and producing from matured fields become progressively higher over the lifetime of the field.

Under the terms of the PSC, both Talisman Malaysia and PETRONAS Carigali are committed to investing over USD 1 billion towards various activities in the contract area, including achieving early production gains, improving operational efficiency and addressing subsurface issues. Additionally, the two partners are also to focus on field redevelopment efforts with a view to realising improved oil recovery potential as well as committing to an enhanced oil recovery pilot initiative.

Talisman Malaysia will be the operator of the PSC area with a 60% participating interest and is expected to leverage on its experience and expertise in operating matured fieldsworldwide.

The PSC was signed on 23 May in Kuala Lumpur. PETRONAS was represented by Encik Ramlan Abdul Malek, Vice President of Petroleum Management. Mr. Ron Aston, Vice President and Country Manager of Talisman Malaysia and Datuk Abdullah Karim, President of PETRONAS Carigali, signed on behalf of their respective companies.

“With the new PVB fiscal terms, we expect to see the PSC contractors to aggressively enhance their efforts and commitments in revitalising and maximising potential from the Kinabalu Oil Fields,” said Encik Ramlan.

“PETRONAS recognises the need to continuously explore for innovative ways to unlock hydrocarbon resource potentialin matured fields.Concerted efforts to further develop these more challenging fields are necessary so that Malaysia will not only able to sustain but also increase oil production in the face of dwindling reserves.

“It is our hope to continue working together with ourcontractors and partners to overcome Malaysia’s upstream challenges, and at the same time offering opportunities for continuous capability development and enhancement for the benefit of the country,” he added.