Shell to Invest in Second Offshore Oil, Gas Project in a Month

Gumusut Kakap - Credit:Ika Prasetyawan
Gumusut Kakap - Credit:Ika Prasetyawan

Shell announced a second investment in Malaysia's oil and gas sector in a month as the major and its partners, including Petronas, aim to revive output in an environment of tight global supply.

Shell's decisions come after the war in Ukraine disrupted Russian oil and gas supplies and boosted prices. Oil and gas producers in Asia are struggling to sustain output after years of under-investment in the sector as international companies scaled back to focus on exploration and production in Africa and the Americas.

Sabah Shell Petroleum Co, a Malaysian unit of Shell, said on Monday it will invest in phase 4 of the Gumusut-Kakap-Geronggong-Jagus East (GKGJE) deepwater offshore development project along with its partners. No amounts were given.

The GKGJE phase 4 development is a subsea tie-back project that is expected to achieve first oil in late 2024, Shell Malaysia said in a statement.

Shell's partners in the GKGJE project include ConocoPhillips Sabah Ltd., Petronas Carigali Sdn. Bhd., PTTEP Sabah Oil Limited, PT Pertamina Malaysia Eksplorasi Produksi and others.

The GKGJE project will revive declining output of Kimanis crude, Malaysia's flagship export grade. Kimanis production has been falling because of a lack of investment and because of technical issues at the Gumusut-Kakap and Malikai fields. 

Earlier in the day, Malaysia's state energy major Petronas said the phase 3 project at the Gumusut-Kakap (GK) deepwater field achieved its first oil production on July 31. 

Two new oil producer wells and two water injector wells were drilled at the GK field, the company added.

"Once fully completed in Q1 2023, the four wells will add around 25,000 barrels per day to GK’s existing production capacity," Petronas said.

Last month, Shell announced plans to invest with Petronas to develop the Rosmari-Marjoram gas fields off the coast of Bintulu in the Malaysian state of Sarawak. 

The project is designed to produce 800 million standard cubic feet of gas per day, with gas production expected to start in 2026, Shell said in a statement.

 (Reuters - Reporting by Ashitha Shivaprasad in Bengaluru and Florence Tan in Singapore; Editing by Christopher Cushing and Raju Gopalakrishnan)

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