The Kinabalu oil field is located offshore Sabah, Malaysia was relinquished to PETRONAS after the expiry of the Production Sharing Contract (PSC) at the end of 2012 after 15 years in production. As common to other matured fields, Kinabalu was experiencing many sub-surface and operational challenges that need to be overcome in order to realize the field full potential. The challenge for PETRONAS as the host authority and resource owner is to select the new operator with proven field redevelopment and mature asset management expertise to take over the operatorship. The new operator should also have the mature field mindset and expected to maximize hydrocarbon recovery through major capital investment, reduce the production cost through operational efficiency and synergies and mature the upside potential. As the host authority it is imperative for PETRONAS to incentivize the operator to continue to identify opportunities to grow the asset through innovative Petroleum Arrangement.
The paper showcases, the successful collaboration efforts between the host authority, the operator and the partner to overcome various challenges to add value to this mature asset through smooth operatorship handover, field redevelopment plans and operational synergies between operators in the South Sabah region. The paper will highlight the role played by the host authority to incentivize and influence the operators to execute the field rejuvenation effort and to realize the potential of a mature field. The paper will discuss the key challenges in the planning and execution of fast track field development to rejuvenate the field and to increase the oil production from 7,000 bopd to 20,000 bopd. The paper will also discuss an integrated operating model to facilitate more efficient and effective utilization of existing and planned infrastructure, improve facilities uptime and reduce the overall operating and development costs for the mutual benefit of operators in the region.
The successful effort to breathe a new life to Kinabalu field marked a significant milestone for the Malaysian oil and gas industry. This is also the first time in the history of the Malaysia oil industry that the asset and the operatorship was transferred from one International Oil Company (IOC) to another IOC. A new innovative Petroleum Arrangement (PA) was adopted for the first time for the matured field PSC in Malaysia to incentivize the PSC operator to grow the asset. The results and lessons learned from the project are crucial in the other future field operatorship handover and mature field rejuvenation in Malaysia.