Shell Links Malaysia Field to Murphy Unit for Early Start

Royal Dutch Shell Plc (RDSA), which has been operating in Malaysia for more than a century, linked its Gumusut-Kakap oil field with production facilities belonging to Murphy Oil Corp. (MUR) to start early output from the deposit.

The field, located about 120 kilometers (78 miles) off the coast, was connected by pipeline to Malaysia’s first deep-water development, Shell said today in an e-mailed statement. As many as 25,000 barrels of oil a day will be pumped from two wells under the first phase, according to Petroliam Nasional Bhd, a partner in the project.

Shell, which drilled its first well in Malaysia in 1910, will start full-scale production from Gumusut-Kakap from 19 wells at the end of 2013, The Hague-based company said. The project is one of Shell’s main Malaysian undertakings with partners that include ConocoPhillips. (COP)

The connection to the Kikeh production facility is an “innovative solution” that will allow for the first oil to be pumped ahead of the completion of the floating production system. That unit is being made by Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) in Johor, said Iain Lo, chairman of Shell Malaysia. “Gumusut-Kakap is a project of national importance.”

Shell is working on several projects in Malaysia and Brunei with about 350,000 barrels oil equivalent a day of potential production, Andy Brown, Shell’s director of international, said Nov. 15. Shell already produces 300,000 barrels a day, or almost 10 percent of its total output, from the two countries and makes 4.5 million tons of liquefied natural gas a year, about 20 percent of the total.

The Anglo-Dutch company has brought on-stream an additional 1 billion cubic feet of gas a day of output in the last 12 months off Sarawak. The company also made the Tukau Timur Deep gas discovery in the third quarter of the year off Malaysia.

Shell last year announced three projects worth about $1.7 billion in investment to develop the Gumusut-Kakap project off Sabah. They include plans to build a diesel processing unit at Port Dickson refinery and a solid wax plant in Bintulu.

Last November, it agreed with Petronas to increase output at Malaysia’s Sarawak and Sabah coasts by as much as 100,000 barrels of oil equivalent a day. Shell is also finalizing plans for the Malikai development off Sabah.

In Brunei, Shell is examining plans to invest in the development of the Maharaja Lela South project, which is operated by Total SA (FP), to supply shallow water gas to Brunei LNG Sdn., according to Brown.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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