Petronas Carigali will hold 20% interest in the block. Credit: Petroliam Nasional Berhad (PETRONAS).

POSCO International E&P Malaysia and Petronas Carigali have secured a production sharing contract (PSC) for Block PM524 offshore Malaysia.

The PSC has been awarded by Malaysia’s state-run energy company Petronas.

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Under the contract, South Korean firm POSCO International’s wholly owned subsidiary POSCO International E&P Malaysia will serve as operator of the block with an 80% stake.

Petronas’ wholly owned exploration and production subsidiary Petronas Carigali will own the remaining 20% interest in the block.

Petronas said that the PSC for the block would unlock the new potential to meet Peninsular Malaysia’s increasing gas demand.

Located in the prolific area of the Malay Basin, the 4,738km² block is surrounded by several producing fields, including the Tangga Barat field, which supplies gas to the Peninsular Malaysia market.

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Petronas Malaysia petroleum management senior vice-president Mohamed Firouz Asnan said: “We welcome POSCO International to Malaysia’s upstream oil and gas industry, and as a new player in Malaysia, they bring their experiences of operating gas fields in other parts of this region, including the technological development of Carbon Capture and Storage.

“Under our right asset, right player strategy, supported by a progressive fiscal regime, we hope to fully maximise the long-term value of the hydrocarbon resources in Malaysia, especially in Peninsular Malaysia where the demand is expected to increase.”

POSCO and Petronas Carigali will now undertake exploration and operation activities at the block over a period of four years.

Earlier this year, Petronas awarded Block SB405 offshore Sabah to Petronas Carigali and ConocoPhillips East Malaysia (COPEM), a unit of ConocoPhillips.

ConocoPhillips will own an 85% operatorship stake in Block SB405 while Petronas Carigali will own the remaining 15% stake.

The block is located in the North East Sabah basin, off the coast of Sandakan.