Flow Magazine Volume 3 - Petronas

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22 3 Editor’s Note Keeping the pioneering spirit aflame

4 News Briefs PETRONAS signs new LNG contracts and other news from the industry

10 Growing with South Sudan

PETRONAS makes its mark on the fast-growing country

SOUTH SUDAN SPECIAL 12 A Vision for the Future South Sudan's Honourable Undersecretary, Ministry of Petroleum and Mining shares his views

14 Sowing for Harvests of Gold



The fascinating tale of operating in the world's youngest country

20 Strength in Diversity South Sudan's only oil producing company features a unique collaboration among its partners

22 A World of Opportunities A South Sudanese UTP scholar shares his experiences of working in Malaysia

24 Up The Ante South Sudanese workers in the oil and gas sector get a boost

28 Future Ready A rundown school in Juba gets a second chance

COVER We explore PETRONAS' efforts to revitalise the country's oilfields through groundbreaking offshore Enhanced Oil Recovery (EOR) methods in this month's cover feature.




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PETRONAS takes Enhanced Oil Recovery techniques to new heights

40 Turning the Tide at Tapis Exxon Mobil and PETRONAS pioneer new offshore EOR applications at Tapis

44 A New Lease of Life The 15-year old Angsi field gets a boost in production

46 Business Unusual PETRONAS and Shell think out of the box to squeeze new life into mature fields

MORE FEATURES 52 A Win-Win Partnership Lundin Malaysia focuses on value growth in Malaysia through the PSC scheme

54 Turkmenistan:Policy of Peace and Neutrality Turkmenistan upkeeps peace and harmony

58 First Oil Triumph More oil flows from Turkmenistan

60 Developing Future Talent Cordella Wong-Gillett shares her thoughts on equipping petroleum engineers with the right skills

46 STAY IN TOUCH WITH US Get in with the flow Petroliam Nasional Berhad (PETRONAS) PETRONAS [email protected]


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KEEPING THE PIONEERING SPIRIT AFLAME IT’S a challenging time in the global oil and gas sector, as industry players grapple with the twin threats of sluggish demand and low prices. Yet, at PETRONAS Upstream we have our sights set very much on the long term. Such are pioneers – whose pursuit, perseverance, purpose and passion persist in spite of challenges.

In spite of several periodic shutdowns between 2012 and 2013, PETRONAS and its partners remain committed to building capabilities in South Sudan.

Despite the low price environment, we continue investing in solutions such as Enhanced Oil Recovery (EOR), which seek to boost production from Malaysia’s mature fields and others around the world.

Why? Because we believe that we are A part of the community where we operate, as much as the community becomes A part of us.

In this third issue of flow, we explore PETRONAS’ EOR journey. What started more than a decade ago crossed a major marker recently with the completion and first gas injection of possibly the world’s first large-scale offshore WAG EOR project at the Tapis field located offshore Terengganu in collaboration with ExxonMobil. The costs and complexity of EOR projects have required new thinking and technologies, especially as the economic viability of such endeavours are challenged. Nonetheless, we continue to blaze new trails through a partnership with Shell Malaysia through the Enhanced Oil Recovery Centre (EORC). The initiative which took flight in 2013 between PETRONAS and Shell will spearhead EOR projects under two Production Sharing Contracts, with the vision of furthering and rejuvenating the productivity of nine fields in offshore East Malaysia.

We understand the importance of having a skilled and competent workforce for the future of the country. Today, 70% of our workforce there are locals. Efforts are also in place to train South Sudanese geologists, operators and technicians, and we have been awarding engineering scholarships to the locals to further their studies. Indeed, identifying and developing talent remains a cornerstone of our success. With the challenges, come opportunities – and for this, flow speaks with the Society of Petroleum Engineers on the trends for talent development. I am confident that with the right mindset, strategies and talent in place, PETRONAS will be able to weather the storm and capitalise on the opportunities that emerge once this season passes. Resilience is the name of the game.

Dato Wee

In the spirit of nation building

In this issue, we speak to some of the people who live in a country that was born out of civil war and continues to be stricken with conflict.

Dato’ Wee Yiaw Hin Executive Vice President & CEO PETRONAS Upstream

PETRONAS Upstream Magazine




LNG contracts MLNG BREAKS NEW GROUND IN JAPAN WITH HOKURIKU ELECTRIC DEAL PETRONAS’ LNG business has expanded into a new territory in Japan following Malaysia LNG’s (MLNG) 10-year agreement to supply Hokuriku Electric Power Company from 2018. Signed on 5 May 2015, the Heads of Agreement (HOA) calls for up to 0.36 million tonnes per annum (mtpa) of LNG to be supplied to Hokuriku Electric from the PETRONAS LNG Complex in Bintulu, Sarawak. The gas will be transported to the Japanese utility’s new receiving terminal that is currently under construction in Toyama.

Hokuriku Electric will be the 17th utility company to become MLNG Group of Companies’ term buyer in Japan.

The delegation from Hokuriku Electric and PETRONAS during the signing ceremony.

PETRONAS LNG REACHES NEW MILESTONE WITH TOHO GAS PETRONAS LNG signed a Heads of Agreement (HOA) in March to supply Toho Gas Co. for 10 years starting in 2017. Under this agreement, a total LNG volume of up to 0.66 mtpa will be supplied to Toho Gas, from a portfolio of PETRONAS supply sources. The LNG will be transported to Toho Gas’ receiving terminals Chita and Yokkaichi in Japan by LNG vessels primarily owned and operated by MISC Berhad, a subsidiary of PETRONAS. Toho Gas, the third largest city gas company in Japan, purchased its first of LNG spot cargo from


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Toho Gas HOA signing ceremony

PETRONAS in 1991. It also has two long-term contracts with MLNG Tiga. The current total contracted volume is

around 1.0 mtpa, making PETRONAS the biggest LNG supplier in Toho Gas’ supply portfolio.


Energy Project

Bayan First Oil

First Oil / First Gas ENERGY PROJECT ACHIEVES MANY FIRSTS An integrated gas delivery project known as ENERGY in the North Malay Basin area reached a significant milestone in April when First Gas from the Muda Production Platform at the Malaysia–Thai Joint Development Area (MTJDA) was successfully introduced into the system. The gas was then delivered to an onshore gas processing plant in Terengganu via a 360 km pipeline in just seven hours. Despite encountering various challenges, the team managed to complete the ENERGY project ahead of schedule and in a record time of 1.5 years. The project also boasts a number of firsts. For instance, its 360 km pipeline is the longest subsea pipeline installed in Malaysian waters. Gas is also directly delivered to the Gas Processing Plant without going through a receiving terminal.

Meanwhile, the installation of the 800 metres of 28” onshore pipelines using the Horizontal Directional Drilling (HDD) method was among the longest done for oil and gas to date in Malaysia. The project team will now focus on the ENERGY Phase 2 - which involves the construction of the Terengganu Gas Terminal (TGAST) in a safe and timely manner to meet the targeted first gas date in the fourth quarter of 2016. BAYAN OIL ACHIEVES FIRST OIL AHEAD OF SCHEDULE Several initiatives to accelerate the production of oil from the PETRONAS Carigali-operated Bayan Field has resulted in First Oil being achieved two months ahead of schedule in April 2015. The field was developed by the Bayan Alliance (BA) - a tie-up between PETRONAS Carigali Sdn Bhd (PCSB)

Enhanced Oil Recovery to tackle ageing fields see page 32 onwards

and Halliburton Bayan Petroleum (HBP) - that aimed to develop the highly complex faulted reservoir and depleted oil field with ageing facilities to maximise production. Initiatives included an infill drilling campaign and the fabrication of a new deck extension for installation by October 2014. This allowed the drilling of four new wells that were initially expected to deliver the first oil by June 2015. Bayan Field has a controlled average production of 2,080 barrels of oil per day (bopd), which is higher than the 1,200 bopd in the approved technical proposal.

PETRONAS Upstream Magazine




Fast track BUKIT TUA SPEEDS TO FIRST OIL PETRONAS Carigali Indonesia (PCINO) has realised First Oil for its Bukit Tua Field Development Project four months ahead of schedule on 17 May 2015. This marks the maiden production of hydrocarbons for PETRONAS’ upstream venture in Indonesia in a block owned and operated by the company. PETRONAS Carigali fully operates the Ketapang Block in Indonesia through PC Ketapang II.

Bukit Tua Well Head Platform

HANDOVER OF YETAGUN NORTH FACILITY TO MYANMAR OPERATIONS The Yetagun North Development Project was successfully completed and the facility was officially handed over to Myanmar Operations ahead of schedule on 27 April 2015. The early completion of the project provided an additional 70 mmscfd of gas that was needed due to the depletion of existing producing reserve at the Yetagun field.

From left: Pui Thai Chong, Head of Myanmar Operations, Abd Malik Jaffar, Head of P&E Department and Noor Ilias M Ismail, Head of Project International


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Health, Safety & EnvironmenT 300,000 MANHOURS WITHOUT LTI AT KINABALU

Commemorating 300,000 manhours without LTI at the THHE yard

milestone in March by achieving 12 million manhours without any Lost Time Injury (LTI) since the project kicked off in March 2012.

A Health, Safety & Environment (HSE) day celebration was held in March to commemorate the achievement of 300,000 manhours without Lost Time Injury (LTI) at the Sumandak/Kinabalu Development Project. Hosted by PETRONAS Carigali Sdn Bhd (PCSB) and Tabung Haji Heavy Engineering (THHE), the event was held at the THHE yard at Pulau Indah, Klang and attended by around 300 people. PFLNG SATU SURPASSES 12 MILLION HOURS WITHOUT LTI

Celebrating 12 million manhours without LTI at Okpo, South Korea

PETRONAS’ first Floating LNG facility (PFLNG 1) crossed another significant

To commemorate this achievement, a Health, Safety & Environment (HSE) Day was held at the Daewoo Shipbuilding & Marine Engineering (DSME) shipyard in Okpo, South Korea, on 7 April 2015, which also aimed to intensify the safety culture for individuals involved in the project. The PFLNG 1 will be moored in Kanowit gas field, located 180 kilometres offshore Sarawak, Malaysia and will produce 1.2 mtpa of LNG.

BINTULU INTEGRATED FACILITY OPERATORSHIP TRANSFER PETRONAS Carigali Sdn Bhd (PCSB) became the new operator of Bintulu Integrated Facility (BIF) as well as the newly appointed network integrator for Sarawak gas supply and demand on 1 April 2015. In less than a year, a special taskforce comprising of PETRONAS, PCSB and Shell representatives worked together to make the speedy BIF Operatorship Transfer a success.

From left: Mohamad Johari Dasri, VP of Production Malaysia, Bacho Pilong, Senior General Manager, Petroleum Operations Management of Malaysian Petroleum Management, and Chok Chee Tsong, Senior Manager of Sarawak Shell Berhad

PETRONAS Upstream Magazine




MILESTONES PETRONAS Recognises 23 Vendors

Hazli Sham Kassim (right), General Manager PETRONAS Carigali Indonesia receiving documents from IGN Wiratmaja, Acting Director General for Oil and Gas, Ministry of Energy and Natural Resources, as a winning bidder for Indonesia Oil and Gas Auction 2014.

PETRONAS WINS TWO BLOCKS IN INDONESIA PETRONAS Carigali Indonesia (PCINO) has won two blocks in the latest bidding round for 16 Indonesian oil and gas blocks. The Indonesian government awarded PCINO the North Madura II, offshore East Java, and Kualakurun, onshore Central Kalimantan block where PCINO has a joint venture with PT Petcon Resources.

PCINO’s plans to invest US$68 million in the North Madura II Block and US$2 million in Kualakurun with PT Petcon. PETRONAS has a total of three years to complete the exploration in the blocks, which covers geological and geophysical work, 2D seismic survey and the drilling of the two blocks.

PETRONAS Carigali Sdn Bhd (PCSB) presented Outstanding Vendor Awards (OVA) to 23 local and international oil and gas service companies for their exceptional performance and delivery for the year 2014. The awards were presented by PCSB President and PETRONAS’ Senior Vice President of Upstream Malaysia, Datuk Mohd Anuar Taib. The OVA recognises excellence in 15 different categories with an emphasis on exemplary performance, reliability, responsiveness as well as a commitment to implementing high standards in Health, Safety & Development (HSE). The annual event, initiated in 2010, also serves as an avenue for PETRONAS to share its business expectations and engage in dialogue with its contractors.

MAJOR MILESTONE ACHIEVED AT SSIOGP The Sabah-Sarawak Integrated Oil & Gas Project (SSIOGP) marked a major Kebabangan Northern milestone on 12 June 2015 as Hub Project (KBB) Malikai six assets were handed over to their respective owners. Kimanis Power Plant (KPP) Dalak pipeline (DLKP) The six assets: Sabah SPR Power Plant Generating Capacity: 100MW Oil & Gas Terminal Gumusut-Kakap (GK) Sabah Oil Gas Terminal (SOGT) (SOGT), The centre of the overall development in SSIOGP Kinabalu NAG (KNAG) the SOGT SABAH Sabah Ammonia-Urea Administration (SAMUR) Project Building Complex, the Gumusut Oil Sabah Sarawak Gas Pipeline (SSGP) Pipeline (GOP), the SabahSarawak Gas Pipeline (SSGP) SARAWAK and the SOGT’s Dry Gas PETRONAS LNG Complex Bintulu Diverter Manifold (DGDM).


PETRONAS announced the RM45 billion SSIOGP project, which involves the development of several upstream and downstream projects over the course of five years, in 2011. The SOGT, the biggest integrated oil and gas terminal in Malaysia, is the first facility that integrates oil and gas operations in one terminal. It has the capacity to process 260,000 barrels of oil, 1,250 million standard cubic feet of natural gas, and 77,000 barrels of condensates per day.

Legend Gas Pipeline Oil Pipeline


Sabah-Sarawak Integrated Oil & Gas Project SSIOGP)

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DELIVERY OF FIRST HPHT DEVELOPMENT WELL On May 31 2015, PETRONAS delivered its first High Pressure High Temperature (HPHT) development well, the KN-B4 well in the Kinabalu Non-Associated Gas (KNAG) Upper Ultra Deep field offshore Sabah. The delivery of the KN-B4 adds 70mmscfd of production capacity, boosting the field’s total production capacity to 365 mmscfd. Planning for the KN-B4 HPHT development began as early as 2011, with the Collaborative Well Planning (CWP) stage taking place at the PETRONAS Real Time Visualisation Centre (PRTVC).

in PCSB resulted in the well being completed with zero recordable process safety incidents throughout the duration of simultaneous operations on site. The experience gained from the project will be used to improve delivery of future HPHT development projects.

Right: HPHT Well_DD3 jack-up type drilling rig at KNPG-B Central Processing Platform Bottom: KNAG PMT Leadership Team Visit to DD3 rig led by Head of KNAG & Sabah Projects, Zaidi A Hamid

The drilling project was not without its challenges, primarily from the presence of hard formations, passing through stacked reservoirs with significantly varied pressure regimes due to depletions. Nevertheless, seamless integration between all the relevant departments Badra First Entitlement Crude Lifting PETRONAS Carigali Iraq Holding B.V. (PCIHBV) achieved another key milestone by successfully lifting and marketing Badra’s First Entitlement Crude on 29 June 2015, marking PCIHBV’s first lifting for the Badra Project. Through PETRONAS’ trading arm PETCO, PCIHBV has now successfully loaded Badra’s First Entitlement Crude volume of approx. 477,557 bbls onto vessel Mt. Maran Centaurus. The lifting commenced on 26 June 2015 and completed its loading on 29 June 2015. The vessel has set sail from Basrah Port and is en route for delivery to end buyer(s) in the Far East. Badra

Operator Gazprom also successfully loaded their first entitlement volume in April 2015. Current production from Badra is averaging over twenty five thousand barrels of oil per day (25,000 bb/d). Badra field in Southern Iraq achieved its First Oil and First Commercial Production (FCP) on 20 August 2014 and 23 November 2014 respectively. Badra DPSC consortium comprises of Gazprom Neft Badra BV of Russia (30%), KOGAS Badra B.V of South Korea (22.5%), PCIHBV of Malaysia (15%), TP Badra Ltd. of Turkey (7.5%) and the Iraqi government, as represented by Oil Exploration

Company (OEC), holds a 25% participating interest. Badra field is operated by Gazprom Neft and is located in the Wasit province in eastern Iraq, straddling the border with Iran.

PETRONAS Upstream Magazine





flow gets an EXCLUSIVE interview with the Honourable Stephen Dhieu Dau, Minister, Ministry of Petroleum & Mining South Sudan, who shares his thoughts on taking the industry forward …

The Honourable Stephen Dhieu Dau Minister, Ministry of Petroleum and Mining of South Sudan


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1. Can Your Honourable briefly describe the Ministry’s vision to develop South Sudan’s petroleum industry? Our Vision hinges on Petroleum Act 2012 and focuses on a number of things, including managing the petroleum sector in an efficient manner, developing competent national workforce for the petroleum sector and creating a conducive atmosphere for the foreign partners, operators and other investors in the oil sector.

On capability building, PETRONAS has been instrumental in offering various training and development programs for NILEPET, MPM and Joint Operating Companies’ (JOCs) national staff to enhance their skills. There is more that needs to be done in order to bring technical staff up to speed in order to address industry needs and challenges.

In future, we hope to get on-job-attachment opportunities for MPM staff in PETRONAS’ HQ and other subsidiaries in Malaysia in order to expose them to PETRONAS’ way of doing business.

2. What have been the industry challenges in realizing this vision and how have these been overcome?

4. How has PETRONAS’ capability building initiatives helped accelerate the development of the industry and the country?

We are currently faced with several issues including the lack of capable workforce. This is across all departments in the industry and we are actively looking for opportunities to upskill our people.

There are also logistics challenges in supporting petroleum operations – for example, getting materials supplied to operating fields in a timely and costefficient manner given our vast geography.

We also want our industry to be world-class. As such, we must emulate good Health, Safety and Environment (HSE) best practices in our operations. Creating this safety culture will be an on-going effort.

On the technical front, we need to deal with improving our data management in order to preserve our technical data to a high quality so it can be used as industry reference.

3. What role do partners like PETRONAS play in this realising this vision?

We believe that PETRONAS brings a wealth of experience and technical capacity that benefit the local industry – whether it’s for unexplored blocks or ageing assets. Technology transfer, for example, in the area of Enhanced Oil Recovery, is one example of a long term collaboration. (Editor’s Note: PETRONAS is currently piloting two EOR projects in South Sudan) PETRONAS can also assist MPM with data management and storage based on its experience as a national oil company.

The Minister and his delegates receive a warm welcome in Malaysia

PETRONAS scholarships have laid a solid foundation for South Sudanese engineers in the oil and gas sector and we look forward to its continuation.

PETRONAS distinguishes itself by offering scholarships to deserving South Sudanese to study in Malaysia. With this, we are building a better pool of technical personnel for long term growth as the scholars return to South Sudan upon completion of their studies.

PETRONAS is also party to the socio-economic progress of South Sudan. Through its Corporate Social Responsibility initiatives, we are pleased to see buildings and schools in Juba restored for the benefit of the community.

5. What are Your Honourable’s plans for the development of the industry?

There are two areas of focus. Firstly, producing blocks. MPM is working on a comprehensive strategic plan to realise its vision. This will entail working with our foreign partners on production enhancement, develop our local workforce and carry out studies on the potential of existing fields.

Our other area of focus are exploration blocks. As the security situation improves in South Sudan, we will embark on an aggressive tender process for new blocks and subsequently invite capable companies to join our oil sector. This, we hope, will accelerate our drive to find new fields and maintain good production in the future.

The South Sudan delegation at the PETRONAS Tower Bridge

PETRONAS Upstream Magazine



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F e at ure F o c us : S o ut h Su dan

When the African nation of South Sudan gained its independence in 2011 after two decades of dispute between the northern and southern states, many oil and gas operators, including PETRONAS and their partners found themselves caught in the middle.

SOWING FOR HARVESTS OF GOLD The country head of PETRONAS in South Sudan tells the fascinating journey of operating in the youngest country in the world.

While around three-quarters of the oil reserves were located south of the border, many offices were in the capital of Khartoum in the north. Despite having been in Sudan since the 90s - making PETRONAS one of the country’s earliest foreign investors - the company had to start many of their operations in South Sudan from scratch as a result of the secession.

By Francis Kan “When the country separated, some of our areas of operations were split in two. So we had to start all over again in some cases, right from setting up the office and finding capable manpower,” recalled Azman A. Aziz, PETRONAS’ South Sudan Country Chairman. Apart from having to establish new entities in the south, PETRONAS also had to negotiate and formalise separate agreements with the Sudan and South Sudan regarding their operations in both nations. Significantly, these included the terms

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n

“I think the outlook for our investment in South Sudan is positive. There is a lot of potential in the country and a lot more reserves can be developed.” Azman A. Aziz PETRONAS South Sudan Country Chairman

PETRONAS IN SOUTH SUDAN: THE JOURNEY Apr /May 2013 Exploration extension for all blocks

Feb 2012 Shutdown due to conflict

Feb 2011 Establishment of PSSO office


Nov 2011 PSSO new headquarters


Jul 2011 South Sudan Declaration of Independence

Country Event

Business Event

of the movement of oil between the two countries. While the oil was being produced in the south, it needed to travel through the north to reach the port for export to the rest of the world. Shutdown Shock However, getting their South Sudan operations off the ground proved only to be the start of many episodes


Jan 2012 Signing of Transition Agreement

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Jan 2012 Conflict between South Sudan and Sudan

Mar 2012 Formation of DPOC, GPOC and SPOC in South Sudan


Sep 2012 Cooperation Agreement signed between South Sudan and Sudan

May 2013 Production resumes after 15 months


June 2013 First lifting since resumption


Mar 2013 Implementation Matrix signed between South Sudan and Sudan


PETRONAS and their partners encountered. In February 2012 the consortiums established between PETRONAS, NILEPET (the national oil company) and several partners were forced to shut down 2 out of 3 fields operations as a result of renewed oil-related disputes between north and south. The shutdown lasted for 15 months, and posed one of the biggest threats to PETRONAS’ operations in the country.

“Our facilities and the nature of our crude was not designed for shutdown, it is meant for continuous flow. So undertaking the shutdown was a big challenge that required a lot of planning and teamwork,” said Azman. “Thankfully, both sides recognised that this was a priceless asset and it was not in either side’s interest to damage the facility.”

F e at ure F o c us : S o ut h Su dan

Dec 2013 Conflict escalated shutdown at GPOC and SPOC. Phased staff evacuation

Jan/Feb 2014 Phased redeployment of PETRONAS staff to South Sudan Jan 2014 Business continuity at PETRONAS Twin Towers KL


June 2014 Development Extension for Block 1B and 3B


Jan 2014 Signing of secession of Hostility Agreement Jan 2014

Ceasefire agreement between government of South Sudan and the opposition




Jan 2015 Agreement on the Unification of the SPLM

June 2014 Agreement to form Transitional Government

With support from their headquarters and partners, as well as the co-operation from both sides of the government, PETRONAS was eventually able to get their facilities up and running by the start of 2013. Today, South Sudan is one of the bigger contributors in PETRONAS’ international portfolio, producing 160,000 barrels of crude a day.

Mar 2015 Extensions of President’s term

Feb 2015 Signing of areas of Agreement on TGONU

A Focus on Locals: The Bedrock for Growth Despite the ongoing turmoil, PETRONAS was focussed from the start on the task of building capabilities in South Sudan. Prior to the secession, most of the company’s workers had come from the north, and once they returned home following the split, there was a talent vacuum that

needed to be filled. The company had to rely on expatriates to keep the oil flowing. “We knew we couldn’t depend on expats for too long. Any country would want business operating in its domain to benefit the locals. So there was a lot of focus at PETRONAS on building capability and capacity in the country,” said Azman.

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n

Faculty of Mechanical trainees at INSTEP, November 2012

Driven by a desire to nurture local talents, PETRONAS has provided various forms of training to the locals - from business and undergraduate engineering to technical programmes. “Our approach to capability building is multi-layered and holistic in that regard,” explained Azman. “We focus on developing core competencies and at the grassroots. Many South Sudanese were deprived of education opportunities before the secession,” he continued. In the past 2 years, 111 South Sudanese trainee production operators and technicians, with the support of the country’s Ministry of Petroleum and Mining and oil partners have undergone training at Institut Teknologi Petroleum PETRONAS (INSTEP) facility in Malaysia. The modules cover project management, oil and gas technical training including production, instrumentation, mechanical and others. Today, the first batch of South Sudanese trainees are undergoing Industrial Training Attachment (ITA) at Dar Petroleum Operating Co Ltd. (DPOC). Additionally, more than two dozen workshops have been organised with ministry officials, in order to develop technical and management best practices. (See story on page 24)


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scholarships to South Sudanese to pursue their undergraduate studies at Universiti Teknologi PETRONAS.


South Sudanese trained at Institut Teknologi Petroleum PETRONAS (INSTEP), Malaysia.


of 2,000 operations personnel are South Sudanese.

PETRONAS has also given out 78 scholarships to South Sudanese to pursue their undergraduate studies in engineering at Universiti Teknologi PETRONAS – currently ranked amongst the top 200 universities in the world. About half of the recipients have graduated and are back working in their home country. (See story on page 22) As an extension to its capability building efforts, PETRONAS has embarked on refurbishing some schools, providing learning aids equipment to the visually impaired and education tools to a number of recipients. (See story on page 28) Looking Ahead Azman is optimistic that, at some point, the two sides of the conflict will reach a peaceful agreement with the help of international mediators. Most immediately, he will be looking to resume production at the two facilities that have been shut down and, further down the line, bring production back to pre-crisis levels of around 200,000250,000 barrels a day in South Sudan. “There is a lot of potential in the country and more reserves can be developed,” he says.

F e at ure F o c us : S o ut h Su dan

PETRONAS’ operations in South Sudan Port Sudan Red Sea

1956 boundry between N & S Sudan Oil producing block



Oil pipeline


Oil refinery Oil tanker terminal

El Obeid



2 1





1, 2 & 4 – GPOC

3 & 7 – DPOC

Empowering lives in South Sudan

Reaching communities in South Sudan with more than 30 community relations programs from 2011 to 2015


Community Development Projects


Community Outreach Programs


Facilities Improvement Programs (Signature)

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n



DPOC is one of three entities owned by PETRONAS and its partners that were set up to develop South Sudan’s petroleum resources following its secession from Sudan in 2011. It is currently producing 160,000 barrels of oil per day (bpd) from two blocks located north-east of the country. This puts DPOC in a strong position to deliver additional value to the development of the country – including building capabilities in South Sudan’s oil and gas sector, explained the company’s president Datuk Joseph Podtung. DEVELOPING HUMAN CAPITAL “Many locals want to be part of the oil industry and our role is to ensure the right people are employed and developed to bring


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CNPC 41%

As the only company in South Sudan producing oil - an industry that contributes around 98 per cent to the country’s gross domestic product Dar Petroleum Operating Company (DPOC) is playing a major part in the development of the nation.

% 40

Datuk Joseph Podtung President Dar Petroleum





the oil industry to the next level and for it to be sustainable in the long-term,” he said. DPOC is looking to give locals more responsibility within the organisation as they gain more experience and skills. To achieve this, the management has identified positions that could be held by South Sudanese and the individuals that could potentially fill them. This includes DPOC’s vice-president role, currently filled by Mohamed Lino Benjamin, a South Sudanese from the country’s national oil company, Nile Petroleum Corporation (NILEPET). A majority of the Manager and Section Head positions, especially non-technical positions, are occupied by local staff. There are 569 permanent employees at DPOC, of which 75% are locals. Additionally, DPOC employs 1,400 national contract workers to support the activities in the oil field.

F e at ure F o c us : S o ut h Su dan

STRENGTH IN DIVERSITY As South Sudan’s only oil producing company, Dar Petroleum is well placed, with its partners, to build capabilities in the country’s petroleum sector. By Francis Kan

A Unique Partnership: Navigating the Tripartite

Each partner brings their unique strengths to the table. While the CNPC representative leads the exploration and production aspect of DPOC, the PETRONAS representative is tasked with the finance and service functions including procurement, human resources and administrative roles - of the joint venture.

PETRONAS owns a 40% stake in DPOC, while China’s CNPC holds 41%. The remainder is held by NILEPET (8%), Sinopec (6%) and Tri-Ocean Energy (5%). To ensure the smooth running of an entity made up of people from different countries and cultures, the presidency of DPOC is rotated between its two major shareholders.

DAR Petroleum’s Field Processing Facilities in Paloch, Upper Nile State which processes crude oil before export

“The presidency of the company changes hands between PETRONAS and CNPC every three years. We also established a management committee representing all the shareholders which makes major decisions through a process of consensus. With this arrangement, operations are not affected when a new president takes over,” explained Datuk Joseph, who took up the presidency in 2013. The company is also driven by a vision, mission and strategic direction that ensure all partners and DPOC staff are aligned to the goals, he added.

These roles leverage on PETRONAS’ expertise in implementing work processes and governance that has been demonstrated in its projects around the world.

“I see this as an opportunity. The uniqueness of this operation means that there a lot of challenges to overcome, so we need this sort of strength to work things out together.” The three-way partnership has augured well for the country, as business operations remain tight in spite of several challenges. “This spirit of common solidarity has brought us through, and I believe will be what it takes to take us into the future,” he concludes.

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n

A WORLD OF OPPORTUNITIES South Sudan’s James Makuach Makeny, a Universiti Teknologi PETRONAS scholar shares his experience working as a reservoir engineer for PETRONAS in Sarawak for the past two years.

THE MOST INTERESTING PART OF YOUR JOB? I deal with a lot of uncertainties and many variables in the field. I face new learning experiences by solving a new case every day, facing different people from different backgrounds, and using different ways to solve problems. I have to adapt to changing conditions quickly and become an open-minded person. As a reservoir engineer, my core role is to maximise the recovery of hydrocarbons at optimal cost. It is very exciting to work in a team comprising various disciplines such as process engineers, production technologists, and geologists. This collaborative culture is one part of what makes PETRONAS a great place to work. It is very large and offers many training and career opportunities. WHY DID YOU CHOOSE TO WORK WITH PETRONAS AFTER GRADUATING?

James Makuach, currenly resides in Malaysia with his family


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When I joined PETRONAS as a fresh graduate engineer my objectives were to give back to PETRONAS as I was a scholarship beneficiary. I also aimed for career development and progression, personal development, opportunities, networking and global exposure in the oil and gas industry. So far most of these

F e at ure F o c us : S o ut h Su dan

78 South Sudanese students have pursued their studies at University Teknologi PETRONAS

UTP Scholars From South Sudan Undergraduates at UTP, Malaysia PETRONAS Education Sponsorship Programme

Paul Adong

objectives have been achieved and there are still opportunities ahead to become a fully well-rounded reservoir engineer. PETRONAS is a model for many national oil companies around the world. The company is well managed and run on sound economic principles and expand internationally. One of PETRONAS’ greatest strengths is the diversity of its workforce, with men and women of many nationalities and backgrounds working together and sharing common objectives and shared values. The company’s philosophy is that high-quality training is fundamental to both the success of both the staff and the business. It also offers many opportunities in terms of career progression and it has many fields and projects located in various parts of the world. WHAT ARE SOME OF THE OTHER UTP SCHOLARS FROM SOUTH SUDAN DOING TODAY? Most of them are doing well and work for various government ministries and departments, applying their technical knowledge and experience in supporting and contributing to the development of our young nation.

Past Managing Director and CEO of Nile Petroleum Corporation, South Sudan’s national oil company

David Rufas

Drilling Engineer, GPOC

Atem Maluak Ayuel

Drilling Supervisor, DPOC

Michael Arop

Founder & Owner, Matku Engineering & Construction Company


Abalo Engineer SIPET oil & gas services company

Some noticeable success stories include Paul Adong, who was previously managing director and CEO of Nile Petroleum Corporation (NILEPET), South Sudan’s national oil company. Others such as Irene Abalo and other engineers who are supporting and contributing to PETRONAS’ operations in South Sudan through its jointly-operated companies. DO YOU SEE YOURSELF GOING BACK TO SOUTH SUDAN IN THE FUTURE? IF SO, WHAT WILL YOU BE DOING WHEN YOU RETURN? Yes, I would really love to go back to South Sudan in the near future in order to give back to my country and to support PETRONAS operations to the best of my competency and ability. South Sudan’s oil and gas industry is young and it faces many challenges. With my technical knowledge, global experiences and exposure, I shall replicate best practices and technology to improve and develop South Sudan’s oil and gas industry. I shall share my technical knowledge and experiences with my compatriots who are keen to work in the oil and gas industry but did not have the opportunities I enjoyed.

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n

Up The Ante More South Sudanese in the petroleum sector are getting hands-on training through workshops and programs run by PETRONAS. Read on to find out more….

PETRONAS’ South Sudan Operations has been helping sharpen the skills of South Sudanese workers in the oil and gas industry since 2011, when it signed a capability building Memorandum of Understanding (MoU) with the then Ministry of Energy and Mining (now known as Ministry of Petroleum and Mining). This involved PETRONAS conducting more than 10 technical training modules. 24

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PETRONAS has since built on that initial effort with subsequent programmes, including an upstream training collaboration with Nile Petroleum Corporation (NILEPET) that ran from September 2013 to March 2015. Under this programme, PETRONAS subject matter experts delivered six training modules at the Nilepet Training and Development Centre in Juba. Participants came from the Ministry of Petroleum and Mining, Nilepet and Joint Operating Companies. Following an MOU between INSTEP and NILEPET in February 2015, technical trainings have been linked

up. It is expected that more than 150 South Sudanese in the petroleum sector will attend the programme to be conducted by instep in Juba. MODULES COVERED The cllaboration between PETRONAS South Sudan and NILEPET has since seen the delivery of these modules. • • • • • •

Upstream Petroleum Legal Regime Framework (7 modules) Petroleum Drilling Oil and Gas Accounting Petroleum Economics Petroleum Reservoir Training Surface Production Operation Training

F e at ure F o c us : S o ut h Su dan

Makui Jacob Deng, Mechanical Engineering Undergraduate in UTP, recipient of the PETRONAS Education Sponsorship Programme

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n

“PETRONAS is an institution that believes in capacity building. Why? Because it is where our success lies. Without qualified personnel in the game, we cannot get very far.” Francis Khamis Bali Planner at GPOC

Mr Gabriel Matut Maliah Gatdet, participant of the reservoir training module at the Nilepet Training and Development Centre, believes that the training would enable South Sudanese geoscientists and engineers in the oil and gas sector deliver their jobs with a higher degree of professionalism. “Most of the South Sudanese geoscientists and engineers who had graduated in various Sudanese universities, lack the necessary skills and knowledge of the oil and gas sector as they were not exposed to intensive training, be it practical or theory, as part of their career development,” said Mr Gatdet, 35, who is a petro physicist at the Greater Pioneer Operating Company (GPOC). The training helped him tackle Reservoir Engineering as an integrated discipline that covers reservoir management right from discovery to abandonment with the aim of


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Gabriel Matut Maliah Petrophysist at GPOC

Francis Khamis Bali Planner at GPOC

managing a depleting reservoir efficiently and economically. It widened his knowledge in the topics of reservoir geology, reservoir pressure and temperature, rock properties, reservoir fluids, reservoir drive mechanisms and reserves estimating and reservoir management. Meanwhile, fellow participant Francis Khamis Bali, a planner at GPOC, believes that PETRONAS is pursuing the correct strategy in helping to build capabilities in his home country. He said: “PETRONAS is an institution that believes in capacity building. Why? Because it is where our success lies. Without qualified personnel in the game we cannot get very far.”

Victoria Jakuru Cosmas, Geologist at NILEPET

Victoria Jakuru Cosmas, a geologist, agreed that the training offered by PETRONAS enhanced her knowledge and helped improve her skills and performance for career development.

PETRONAS Upstream Magazine


Feature F ocus: S ou th S u da n


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F e at ure F o c us : S o ut h Su dan

Future Ready Children, teachers and alumni from East Atlabara Primary School have a renewed passion for learning. Here’s why…

When Dr Cosmas Pitia Kujjo returned to his old primary school in Juba, South Sudan, he was disturbed. Following decades of conflict, the buildings at Atlabara East Primary School had deteriorated badly. “It was horrible and unbearable for me to pass through the school and look at it in that condition,” said Dr Kujjo, who is Director General, Directorate of Mineral Development at South Sudan’s Ministry of Petroleum and Mining. It was not a suitable place for learning.

Students at Atlabara East Primary School thrilled with the new facilities.

PETRONAS Upstream Magazine


Feature F ocus : S ou th S u da n

Madam Drucilla, School’s Head Teacher

“The experience of working with PETRONAS for this programme has been very good. The teachers and the community at large appreciate PETRONAS’ contribution to our school.”

From left: Titus Adam, John Wani and Angelo Abdalla School teachers

Mr John Wani

Betty Conasiba Bada, Primary six student

Madam Asunta Idris Alwan Augustino, Assistant Inspector at the Ministry of Health in South Sudan

His view changed drastically last year after a major Facilities Improvement Programme (FIP) was sponsored by PETRONAS.

The school’s teachers were equally impressed by the changes and were confident that the students’ learning experience would be boosted by the improvements.

The four-month initiative involved the refurbishment and reconstruction of various areas at the Atlabara East Primary School, aimed at providing a more conducive learning environment for students.

“The school is today considered the most beautiful government school in Juba City with good facilities,” said the school’s head teacher, Madam Drucilla, 60.

Works included the repair, painting and expansion of two blocks of classrooms, the construction of a new teachers room, a multi-purpose court for sports and new toilets. A new headmistress office and library was also built.

Added teacher Mr John Wani: “ The FIP has improved the school’s ability to carry out its mission of improving education performance and we see a higher number of students. This is due to the enhancement of school ambience with better facilities such as classrooms, staff offices, store room, and a multi-purpose court for sports.”

“During the school tour, I was so impressed by the remodelling of the classes and the offices,” said Dr Kujjo.


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The changes have also seen many parents wanting to send their children

to the school, resulting in a jump in the student population from 207 to 320 students – as there are more classrooms to accommodate more students. One such parent is former student Madam Asunta Idris Alwan Augustino 42, Assistant Inspector at the Ministry of Health in South Sudan. “Parents of students including myself are now willing to send their children to the school due to the good condition and facilities of the school,” she said. Most importantly, students such as Betty Conasiba Bada are reaping the biggest benefits from the FIP. “These days, we enjoy going to school because we love the learning environment. After school session ends, we can now have our sport activities at the multi-purpose court,” remarked the primary six student.

F e at ure F o c us : S o ut h Su dan

“The experience of working with PETRONAS for this programme has been very good. The teachers and the community at large appreciate PETRONAS’ contribution to our school,” Wani said. PETRONAS’ involvement with this Atlabara school started in 2010 when it was selected as one of the recipients of the PETRONAS Mobile Library Programme. “We have 320 students at present and with great hope some of these students will be the leaders of this nation in the future,” said Atlabara East Primary School head teacher, Madam Drucilla.

Atlabara East Primary School Facilities Results of the FIP Improvement ProgramME Quantitative Results No.



Dr Cosmas Pitia Kujjo studied in this school when many residents of Juba town were displaced. By then it was a single classroom school (Khalwa). However, it became a proper primary school after the Addis Ababa Agreement. I would like to express my sincere thanks and gratitude to PETRONAS, for their great contribution to South Sudan in general and in the field of Education in particular. It’s worth mentioning that such contributions and cooperation promotes and strengthens bilateral relation between our beloved nations.

After FIP

No. of classrooms: 4

No. of classrooms: 6

Student population: approx. 220

Student population: approx. 320

Remarks Additional 2 classrooms allows more school children to receive formal education

Quantitative Results No.

Dr Cosmas Pitia Kujjo, Director General in the Ministry of Petroleum and Mining Republic of South Sudan, and Atlabara East Primary School alumni

Before FIP

Before FIP

After FIP



Uncomfortable learning environment

Conducive learning environment

Equipped with classroom facilities i.e. lighting system, desks, fans,chairs, benches


Limited sport activities

Students are more involved in sports programs and activities

New multi-purpose court constructed for the school

The Atlabara East Primary School was built by a merchant named Mohamed Ahmed Ali in 1972. It had two humble classrooms and a small office which could hold three tables and a very small store. Classrooms were made of local construction materials such as clay, soil, rocks and wood. The condition of the school buildings deteriorated during the 21 years of war.

Atlabara East Primary School



PETRONAS Upstream Magazine




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They say the journey of a thousand miles begins with a single step. For PETRONAS, its Enhanced Oil Recovery (EOR) journey began some three decades ago, and like many journeys, it began on paper.


FRONTIER PETRONAS is positioning itself as a pioneer in offshore Enhanced Oil Recovery in the region, and knows that its success lies in technology and technical know-how, strong partnerships and capability building.

The first EOR study for Malaysian oilfields began in 1986, and it was a decade later that the first EOR evaluation took place at the Dulang field offshore Terengganu. However it wasn’t until 2002 when a PETRONAS corporate strategic study identified EOR as one of the national oil corporation’s strategic projects that EOR really rose in prominence. The initiative receiving the much-needed direction and funding, eventually culminating in the realisation of Malaysia’s first-ever largescale EOR project, Tapis, in 2014. The Tapis EOR project, undertaken jointly between PETRONAS Carigali Sdn Bhd and ExxonMobil Exploration and Production Malaysia Inc, is the largest offshore EOR project in Southeast Asia as well as one of the world’s largest water alternating gas (WAG) EOR projects implemented offshore. It is one of several upstream investments under Malaysia’s Economic Transformation Programme representing a US$2.5 billion investment by ExxonMobil and PETRONAS Carigali - to help ensure reliable and

PETRONAS Upstream Magazine



Watch PETRONAS’ efforts in EOR - a 4 minute video on the PETRONAS YouTube Channel

Enhanced Oil Recovery (EOR) Extending Field Life, Improving Oil Recovery Enhanced Oil Recovery (EOR) Extending Field Life, Improving Oil Recovery

Information presented in this article is accurate as at 31 December 2014


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“EOR projects are not cheap, they are cost intensive so we have to ensure that we derisk the project to a proper level and that we know what are the results at the end of the day.” Dr Nasir Darman Head, Technology, PETRONAS Upstream

sustainable energy supply for Malaysia. (ExxonMobil and PETRONAS Carigali each hold a 50% participating stake in the project.) Fully designed and built in Malaysia by local contractors, fabrication activities for the Tapis EOR project commenced in November 2011, and comprise among others a new riser platform (Tapis Q) and a new central processing platform (Tapis R). (See page 39 for facts on Tapis) WAG injection from the Tapis R central processing platform into targeted wells on the existing Tapis A platform commenced in September 2014, and with WAG EOR, the Tapis field life is expected to be extended for at least another 30 years, to beyond 2040. Since production began at the Tapis field in 1978, approximately 400 million barrels of oil have been produced, with peak production of 80,000 to 90,000 barrels per day (bpd) achieved in the early 1980s. Current production stands at 4,000 to 5,000 bpd. The project is by no means the sole EOR project in Malaysia – to date there are about a dozen fields under study for EOR in the country and PETRONAS

is targeting between 750 million and 1 billion barrels of oil from EOR projects. These targets illustrate just how far PETRONAS has come in its EOR journey. TURNING POINT Dr Nasir Darman, one of the pioneers for EOR at PETRONAS remembers vividly the point when EOR moved from being purely research-driven, and he credits former PETRONAS President and Group CEO Tan Sri Shamsul Azhar Abbas (who was then the Vice President of Exploration and Production) and Ramlan Abdul Malek (who was previously Vice President of the Petroleum Management Unit) as the prime movers behind PETRONAS’ EOR initiative. “They formed a team of technical people and we chartered the EOR blueprint in Malaysia - looking at what fields to focus on, technology to apply and how to collaborate with the partners,” says Nasir, who was selected to lead the team. The year was 2003, and at the time the team only comprised five people.

With a structure, budget as well as the support of PETRONAS’ management, Tapis and Guntong were identified to be anchor projects in collaboration with ExxonMobil, fields in the Baram Delta Operations and North Sabah with Shell, as well as PETRONAS’ own projects namely Dulang, Angsi and Semarang. Of these projects, some such as Tapis have entered operation mode, others such as Baronia have commenced fabrication while some are still awaiting funding, as the current oil prices has had an impact. “EOR projects are not cheap, they are cost-intensive so we have to ensure that we de-risk the project to a proper level and that we know what the results are at the end of the day. We have to mitigate the risk no matter what the oil prices are… oil prices do help in the decision making of the project,” he says, stressing the importance of balancing profitability and the strategic nature of the project. “We should not do a project for the sake of doing a project.”

PETRONAS Upstream Magazine



Critical success factors Elaborating on the critical success factors of an EOR project, Nasir highlights three key areas – the technical and commercial aspects of a project and capability building. “One has to solve all issues relating to EOR, from A to Z and it’s not easy because

it involves injecting something alien or unfamiliar into the field and when you do that, you have to predict the side effects. We don’t just have to ensure it produces oil but that the reservoir is not damaged, and at the same time also address how the oil is to be handled at the surface.

“From the commercial standpoint we want to ensure that everyone goes to the bank smiling. So the cake needs to be cut fairly for all parties – Production Sharing Contract (PSC) partners, PETRONAS as the host authority and also the government,” he says, adding that in this regard both the government and PETRONAS have taken a long-term view. “The Malaysian







Signing of first EOR-based PSC with ExxonMobil. Formation of UTP EOR Centre of Excellence Dulang WAG Project sanctioned.

• Dedicated EOR Unit formed in PMU & PCSB. • First EOR study evaluation in Dulang Fields. • First EOR study for Malaysia oilfields.


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First offshore Chemical EOR pilot (Angsi) implemented Studies of three major EOR initiatives (Tapis, Guntong, Bokor).


Government has given tax incentives for EOR to encourage more EOR projects and PETRONAS has provided a lot of facilitation for PS contractors and new PSC arrangements to make it attractive for the partners,” he adds. But what is especially critical to the success of the EOR initiative is education


Commencement of Tapis, Dulang, Samarang and Bokor WAG Projects. R&D on CEOR properties & processes.


First injection (Dulang)2013. Formation of EPTC.

and capability building. We sent our people for training and attachment, and this is where the relationship with universities and research institutions outside Malaysia is important…we need that collaboration in order to develop capabilities,” he says, disclosing that the EOR team now boasts a staff strength of 500.


• Signing of EOR PSC for Baram Delta & North Sabah.

Some of the partner institutions include Houston University, University of Texas in Austin, Herriot-Watt University in the UK, Delft University of Technology in the Netherlands and locally, Universiti Teknologi PETRONAS and Universiti Teknologi Malaysia.



Developed proprietary chemical for CEOR. Tapis WAG injection. Angsi CEOR injection Baronia WAG Guntong eWAG Samarang WAG Baram Delta & North Sabah injection

PETRONAS Upstream Magazine



HIGH EXPECTATIONS As much as these factors are contributing to the success of the EOR initiative in Malaysia, Nasir concedes that they also present challenges. On the technical front for example, he points out that the Malaysian environment is unique in that the EOR fields are located offshore, with high-temperature reservoirs. “These two alone bring a lot of issues… EOR in itself is not new, it’s been implemented in the US, and also China which is big in chemical EOR but the

majority of EOR projects in the world are onshore. So we did not have a frame of reference or case studies to learn from…there was a lot of pioneering work undertaken,” he says, adding that through the Tapis project, PETRONAS is establishing itself as a pioneer in WAG EOR technology in the region. The expectations for EOR are undoubtedly high and although to date more than 300 million additional barrels have been added to the reserve book, Nasir believes that the recovery rate can be further

improved. “We’re currently doing easy EOR which is WAG and we’re thinking that five years down the road what will the field look like after WAG? That’s why we’re undertaking research on enhanced WAG where we introduce surfactant, polymer and alkali to the water and gas so that we can increase the recovery rate. “PETRONAS hopes to also shorten the time to execute the EOR projects, from 10 years or more to five or seven years…so these are what we’re working towards.”











Located approximately 200km offshore Peninsular Malaysia in 65m water depth, the Tapis field - one of ExxonMobil’s earliest fields in the country – was discovered in 1969 when the company drilled its first exploration well, Tapis No.1. The well, the company’s first in the Malay basin, encountered gas, and in 1974, the second well discovered oil.


The Tapis A platform was installed in late 1977 and production began in March 1978. Over the years other Tapis platforms were fabricated and installed - Tapis B in 1979, Tapis C in 1980 and Tapis D in 1982. Two other platforms were installed later - Tapis E in 1999 and Tapis F in 2003.


See page 43 for full project diagram

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First large-scale Enhanced Oil Recovery (EOR) project in Southeast Asia

Tapis EOR At A Glance

PETRONAS Upstream Magazine


Feature F ocus: Off s h ore EOR




Market Analysis IHS Energy make their bet: the sharp decline in oil prices is unlikely to impact Malaysia's deepwater projects in the near term

Turning The Tide At


“Near-term Malaysian deepwater projects will not be deterred by low oil prices” says Dylan Mair, Senior Director of Upstream Research and Consulting. By IHS ENERGY


APR / MAY 2015





Innovation Giving a 40-year-old asset a new lease of 48 A snapshot on Production Sharing life reflects a high point forandExxonMobil Contracts insights from an international company doing business as it pioneers new approaches in offshore in Malaysia EOR application in the first and largest full-field WAG EOR in South East Asia. Production Sharing Contracts have been key in the growth of Malaysia’s petroleum resources for the past two decades.

Since its introduction almost 40 years ago, Malaysia’s production sharing contract (PSC) scheme has been a key platform for the growth of the country’s oil and gas sector.

What is a PSC?

PSC or Production Sharing Contract serves as a vehicle for partnership for PETRONAS and multnational oil & gas companies in conducting hydrocarbon exploration & production activities in Malaysia.

PSCs set out the arrangements for co-operation between PETRONAS, which assumes the role of a regulator, with qualified oil companies as contractors for the exploration, development and production of petroleum in a contract area for a specific duration.

It is used to engage capable oil and gas companies to participate in the development of Malaysia’s petroleum blocks, covering the entire upstream value chain.


APR / MAY 2015

Prior to 1974, the Government, under a concession system collected, tax from oil companies which were granted rights to explore and develop petroleum resources with leases of up to 40 years or more.

In 1974, the Petroleum Development Act (PDA) vested PETRONAS with the ownership and control of all hydrocarbon resources in Malaysia. This led to the adoption of PSCs to replace the Concession Agreement in 1976 so that the nation could play a more direct role in controlling

and managing its petroleum resources. The first PSC was awarded in 1976 to Esso for the Duyong oil field in Terengganu.

Unlike the old concession system, the key advantage of the PSC is that it allows PETRONAS to have input in strategic and operational decisions, ensuring that the operations are aligned with the group’s business objectives and nation building agenda.

Malaysia has awarded over 150 PSCs since the inception of the scheme in 1976, of which more than 100 are currently actively managed by the Malaysia Petroleum Management organisation in PETRONAS.





100 PSC’s








100 PSC’s


215 billion




The Tapis Enhanced Oil Recovery (EOR) project is a major endeavour for ExxonMobil, and A BEACON represents another HOPE highpoint in its decadeslong relationship with PETRONAS. “By installing the reef balls, we hope to improve the marine life and perhaps the local fishermen can get more fish.” Azizah Mohd Deli

Chairman of the BEACON Project Taskforce

Walk along the coastline of Similajau National Park, the beauty of the blue skies and golden sand can lull one into a comforting sense of serenity. The waters postcard, however, tell story.

For the past 20 odd years, the corals in the waters here have been dying, the number of fish dwindling and scores of turtles found dead on the beach; and all because of the fishing by trawlers that takes place here. It didn’t use to be this way.

this underwater paradise that led to him become a marine biologist.

“Watching the ocean’s rich marine life decline over the years really upset me. The trawlers and their dragnets – they’ve destroyed a lot of the corals here,” he says.

Marine biologist James Anak Bali,

Corporation (SFC), remembers the first time he dived at the age of 20. He was exposed to marine life of all shapes, sizes and colours; as well as corals that appeared in hues that only seemed to exist underwater. It was the allure of

“When the corals die, the marine life goes with it. They’ve fished here undeterred for so long, even the turtles

dragnets, they don’t stand a chance. Fewer and fewer make it to shore to lay eggs,” explains James.



Similajau National Park from trawlers’ nets is already showing impressive results. By BRIGETTE ROZARIO

54 00

55 00

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The Tapis EOR project offshore Terengganu represents a significant milestone in ExxonMobil’s 50-year upstream history in Malaysia. The project, undertaken jointly with PROVING PETRONAS Carigali Sdn Bhd, is ITS METTLE ExxonMobil’s first large-scale, full-field IN THE offshore EOR project – with a few firsts60 DEEP in techniques and technologies used to recover additional reserves from the mature field. D E E P WAT E R

When PETRONAS took over the running of the Chinguetti field in Mauritania in 2007, production had been falling rapidly and prospects for the West African country’s only producing field looked dire. Chinguetti had achieved its first oil on 24 February 2006, but within a few months production rates had plunged from 75,000 barrels per day (bbl/d) to 30,000 bbl/d due to a lack of pressure support. By the time PETRONAS entered the picture through it’s through its whollyowned subsidiary PC Mauritania 1 Pty. Ltd. (PCMPL), production had fallen further to just 11,000 bbl/d.

if nothing was done to reverse the situation.

Given the rapid production decline, coupled with high operation expenditure and decommissioning costs, the field was expected to reach its economic limit in 2013

The field was developed in two main phases, using subsea wells located within manifold-templates that are tied back to a Floating Production Storage and

Significantly, PETRONAS’ operations at Chinguetti were the first for the company involving Subsea Production systems (SPS). To boost production, PCML implemented an aggressive development and intervention program involving both drilling and intervention activities in 2008.

PETRONAS’ successful intervention campaigns at the Chinguetti field in Mauritania have proven its ability to handle deepsea operations under challenging conditions.

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“This is one of the largest EOR projects in Southeast Asia and the first largescale, full-field EOR development in Malaysia. We are proud of the team Sustainability and proud to work together with Project Beacon looks Carigali PETRONAS and PETRONAS to save the corals to realise this project,”and says See marine off Similajau Kok Yew,life President of ExxonMobil National Park Exploration and Production Malaysia Inc. (EMEPMI) and Chairman of the ExxonMobil Subsidiaries in Malaysia, of the close collaboration between the oil major, its joint venture partner and PETRONAS. The Tapis EOR project is one of several upstream investments under Malaysia’s Economic Transformation Programme - representing a US$2.6 billion investment by ExxonMobil and Deepwater PETRONAS Carigali to help ensure PETRONAS has proven reliable and sustainable energy its deepsea credentials supply Malaysia. ExxonMobil with itsfor successful and PETRONAS Carigali each hold a intervention campaigns in Mauritania 50% participating stake in the 2008

Production Sharing Contract (PSC) under which the project is helmed. The commencement of operations in September 2014 with Water Alternating Gas (WAG) injection from the Tapis R central processing platform into targeted wells on the existing Tapis A platform was a culmination of more than a decade of research and study, says See. “It’s a historic milestone for us in our partnership with PETRONAS,” he adds. “As operator of the field we clearly had a view on the potential of the field and in identifying what further potential it might have in terms of the remaining reserves. In 2000, we started scoping out the EOR potential for the field and a formal EOR joint study with PETRONAS was initiated in 2003,” he says, acknowledging that since the technology had not been used in Malaysia before, the team wanted to thoroughly examine its potential application here.

F e at ure F o c us : Off s h o re EOR

Tapis R Platform

“EOR cannot be applied to all fields and it depends on the reservoir and fluid characteristics as well as the recovery from the existing methods used. So we needed to do the technical work in order to convince ourselves that it’s the right thing to do and that was exactly what the team did,” he says, adding that a few PETRONAS staff were on secondment at ExxonMobil’s upstream research company in Houston to further study and define the potential of EOR. In addition, given that EOR technology is typically applied to mature fields, the project also had to be able to bring economic value.

The results of the study later formed the basis of the 2008 PSC and following the signing of the PSC, further design and planning were undertaken before the project was finally funded and realised. With EOR, the recovery factor at Tapis is expected to increase by some 5% - 10%, bringing the total recovery up to 50%, and extending the field life for another 30 years. TECHNOLOGY IS KEY Fully designed and built in Malaysia by local contractors, fabrication activities for the Tapis EOR project

commenced in November 2011. The Tapis EOR project comprises several major components – one of these, a new riser platform called Tapis Q was installed in September 2012. The main component of the project, the Tapis R central processing platform was installed in May 2014. It comprises a large integrated deck structure with living quarters for 145 personnel, and is equipped with 390 million cubic feet per day (MMcf/d) gas compression and 270,000 barrels per day water injection facilities, productionprocessing equipment, and utilities systems.

PETRONAS Upstream Magazine


Feature F ocus: Off s h ore EOR

“There are some pretty neat state-of-the-art modelling techniques used to identify the hydrocarbon in the ground… as well as additional technology such as integrating the surface and sub-surface information so that the engineers at the office are able to monitor the performance of the wells and the field in almost real-time.” See Kok Yew President of ExxonMobil Exploration and Production Malaysia Inc. (EMEPMI) and Chairman of the ExxonMobil Subsidiaries in Malaysia

See is particularly proud of the technology and techniques that have been employed in the development and realisation of the Tapis EOR project, for instance the installation of the Tapis R platform, which is the first by EMEPMI using the float over method for its topsides. The combined topsides and jacket, which weigh about 23,500 metric tonnes, is also the heaviest platform constructed in Malaysia by the company. Given that EOR is still a relatively new and niche technology, and coupled with the scale of the project, project management, says See, is vital and this too is an area where ExxonMobil had a key role to play. “You need very good project management and project execution capabilities and with our global expertise in managing and executing projects around the world, we were able to apply those practices to Tapis,” says See. Although the Tapis EOR project has taken off without a hitch, and has been executed safely without any loss time, See says there is still a lot more


AUG / SEP 2015

work ahead. “A lot of the work that has been done so far involves modelling and is simulation-based, so the real proof of the project is when we start the WAG process and see how the wells perform,” he says, adding that the project is in the midst of the first cycle of the WAG process. Technology, he reiterates, plays a significant role in the EOR project, and is a key strength that ExxonMobil brings to the venture. “There are some pretty neat state-of-the-art modelling techniques used to identify the hydrocarbon in the ground… as well as additional intelligent field technology such as integrating the surface and sub-surface information so that the engineers at the office are able to monitor the performance of the wells and the field in almost real-time. “There are also distributed temperature sensors which are able to identify which zones the injected fluid (whether it is water or gas) is going into without needing any well intervention and which will allow engineers to monitor performance of the wells in real time,” he says.

He points out that the pioneering techniques and technologies being employed have created opportunities for ExxonMobil and PETRONAS engineers to build and enhance their capabilities. This, he adds, will be a boost for the country’s oil and gas industry and is also in support of the national oil corporation’s aspiration to be the EOR centre in the region. ADDITIONAL LEARNING For ExxonMobil, although EOR methods are specific and unique to different reservoirs and fields, See does not discount the value of lessons gained from the Tapis EOR project. “It’s going to help us provide additional learning and information on how it may work elsewhere around the world,” he says. But for now the focus is on completing the remaining work at Tapis, he adds. This includes rejuvenating the existing platforms and converting the existing wells to be WAG-enabled.

F e at ure F o c us : Off s h o re EOR


18,000 metric tonne topsides comprising integrated deck structure with space for production processing equipment, utilities system and living quarters for 145 personnel.

More than 1,800 personnel during peak construction activity. More than 12 million work hours to date with Zero LTI.

Capacity for 390 mmscf/d of gas injection and 270 mstb/d of water injection. Main oil pipeline for production from Tapis R to Tapis Pump platform via Tapis Q.

Installed in 64m water depth in the sea. Largest jacket installed by EMEPMI at 5,500 metric tonnes. 800,000 work hours involving more than 600 workers during peak construction activity. HSE Record: Zero LTI.

The topsides combined with the jacket weight of 5,500 metric tonnes makes it the heaviest platform constructed by EMEPMI at 23,500 metric tonnes.



95m vertical flare.

Tapis R platform is a central processing platform. Measures up to about 14,000 sq metres (almost the size of two soccer fields).

2,300 metric tonnes topsides. Four-legged jacket with an integrated deck. Two access bridges to link with Tapis-R and existing Tapis B platform.


One of the largest offshore EOR projects in South East Asia Malaysia’s first large scale EOR project

TAPIS C (WAG / Unmanned Facilities) TAPIS F

TAPIS A (WAG / Unmanned Facilities)

TAPIS E (Additional GI) New Central Processing Platform (Tapis R) ~18,000 tonnes topsides Gas Compression Water Injection Processing Facilities Living Quarters

New Riser Platform (TAPIS Q) Launchers / Receivers Facilities Pipeline Tie-Ins

Oil Line Gas Injection (GI) Water Injection (WI) Non Associated Gas (NAG) Water Alternating Gas

TAPIS B (WAG / Unmanned Facilities)


TAPIS D (WAG Facilities)

Terengganu Crude Oil Terminal


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Angsi field is located about 170km off the east coast of Peninsular Malaysia, in the southern region of the Malay Basin. It is the biggest oil producing field in Malaysia.


A NEW LEASE OF LIFE It’s been fifteen years since the Angsi field delivered its first oil. The maturing field, producing some 100,000 barrels of oil daily at its peak, is one of about a dozen fields which have been identified to be studied under PETRONAS’ Enhanced Oil Recovery (EOR) plan.

The Chemical EOR approach relies on a smart mixture of alkali surfactants (AS) and softened seawater. It requires sophisticated seawater desalination and chemical mixing and the performance of the approach depends on the quantity and quality of the mixture.

Based on field research, PETRONAS Carigali, the operator, is hoping to record up to 10% recovery factor through a fouryear Chemical EOR work programme. Lab tests and R&D work began as early as 2003 and a field pilot was conducted in 2007.

The PETRONAS team explored various approaches, including utilising an offshore floating barge which would house a seawater desalination and chemical mixing facility and with AS chemicals transported to the barge.


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So how would this ‘cocktail’ be safely, effectively and economically delivered to the platform located about 170km offshore? New engineering designs came into play.



ANGSI CHEMICAL EOR Seawater Intake Structure


Water Desalination Chemical Mixing Plant




ra Pip -And TCOT 0km) ’ 4 2 ing bout 17 Exist (a



Chemical Supply via Road Transfer


There were several barriers to this approach including high costs and logistics constraints to transport 300 MT of chemicals daily to the offshore barge, especially during the monsoon season. THE WINNING SOLUTION The team then looked at establishing the facilities onshore by leveraging on an existing unused pipeline which was already connecting the oil terminal in Kerteh (TCOT) and offshore Angsi Platform. Detailed studies were carried out in 2013 to establish the new concept’s feasibility including laboratory works to verify that the “cocktail” maintains its effectiveness after the 170 km journey in the pipeline before reaching Angsi. This new approach generates some savings in terms of facilities costs to the organisation and simplifies the chemical handling logistics and overall operations of the facilities.

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Baram Delta Platform


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Unusual To address the challenges of using EOR to boost production at mature fields, PETRONAS and Shell are combining their strengths to deliver trailblazing solutions. After years of working together to develop the country’s petroleum resources, the partners took their relationship to a new level in 2012 by jointly setting up the Enhanced Oil Recovery Centre (EORC).

Whether it’s the use of low-cost structures and wells, innovative contracting strategies, or the latest oil recovery techniques, a joint initiative between PETRONAS and Shell to revive production at several mature oil fields in Malaysia is breaking new ground on multiple fronts.

The joint venture builds on two existing Production Sharing Contracts (PSC) between PETRONAS Carigali and Shell Malaysia in offshore Sarawak and Sabah, and extends them till 2040. Under the new arrangement, the partners will build on their respective expertise to boost production at nine fields in the Baram Delta Operations (BDO) area and North Sabah (NS) using enhanced oil recovery (EOR) techniques. “We are leveraging on the strengths of the partners. PETRONAS has implemented light-weight technology and Shell has subsurface technology,” said Sohaime Abdullah, the head of EORC in an interview with flow.

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“We believe we can do it with the right strategies in place and with the right price. Both partners are aligned to deliver these signature projects, we are like two brothers drinking from the same well.” Sohaime Abdullah Head of EORC

many groundbreaking processes have been brought to bear at the centre. “We cannot continue to do business the way we have in the past. We have to do things differently. I call it business unusual,” said Jacobs. ECONOMIES OF SCALE The key challenge of EOR is to ensure the economic viability of such projects. Unlike fields with marginal reserves to be developed within a short period of time and with very minimal facilities requirement, EOR projects are economically thin due to low reserves addition, and the high cost of EOR facilities.

PETRONAS and Shell taking a leap forward together

EOR involves various techniques for increasing the amount of crude oil that can be extracted from an oil field. It is also known as tertiary recovery, as opposed to primary and secondary recovery that normally has a higher rate of production and is technically less challenging to extract. EORC is overseeing development at nine fields - six in BDO and three in NS - and is responsible for ensuring end-to-end project delivery across Field Development Plans (FDP) and projects execution. In terms of reserves addition target, most of the projects in EORC are aiming for incremental reserves recovery of between 5% to 10%.


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DRINKING FROM THE SAME WELL Unlike traditional PSCs, the EORC features a unique working arrangement between the partners. Working as a single entity, the joint venture is governed by a board that meets once every quarter and endorses key decisions. “Both partners contribute staff to the EORC. We work as one, and don’t distinguish between PETRONAS and Shell,” said Jan Willem Jacobs, who serves as the EORC’s technical director. The initiative is unchartered territory for both partners. While Shell has experience in EOR, it has never attempted it for an offshore field. The newness of the effort means that

As such, EORC was set up with an integrated operating model with potential economies of scale; using novel contracting strategies and new technologies in an effort to make EOR projects feasible. For instance, new technologies such as lightweight structures and fit-forpurpose design have been employed to keep a lid on operating expense. EORC has also pioneered a new bidding system. “EOR is all about economics, so we looked at the way we do our bidding. We work backwards so that we know what we can afford,” said Sohaime. In another pioneering move, the EORC has grouped together many drilling


services that would usually be parceled out to numerous contractors to be awarded to one party under an integrated drilling services contract. “We have a single party that executes 20 odd services and dictate the cost for it. It’s a win-win situation. They get all the services and we can keep the price to one lump sum amount,” he said. The partners have also succeeded in using optimisation methods to bring down the cost of a well down by half.

TACKLING COMPLEXITY Each of the nine fields under the purview of the EORC brings its own set of challenges and differing levels of complexity for EOR. The team is testing various technologies and are at various stages of field development. “It varies a little bit from field to field. In terms of complexity I would rate Bokor 3 out of 10 and Baram 7 out of 10 because it is a really big field,” said EORC technical director Jan Willem Jacobs. EOR TECHNOLOGIES: A VARIETY

STRONG SAFETY RECORD So far the EORC has maintained the sterling HSE track records of the two partners. The joint venture has gone almost 1 million hours without any accidents; quite an achievement for a young venture, remarked Sohaime. The EORC has a dedicated HSE team that brings together the best practices from the two partners. Despite the progress so far, there is still a long way to go before the EORC can declare this ambitious initiative a success. The current low oil price environment has made the going tougher, but both partners are confident of eventually reaching their goals. “We believe we can do it with the right strategies in place and with the right price. Both partners are aligned to deliver these signature projects, we are like two brothers drinking from the same well,” said Sohaime.

There are several EOR technologies being used – depending on the field profile. The group is employing iWAG at the six fields in the Baram Delta Operations. This involves the injection of water alternating with gas into the reservoir to improve recovery. For North Sabah, the EORC plans to employ Chemical injection that uses surfactant and polymer directly mixed with filtered seawater. The injection of chemicals frees trapped oil in the reservoir. With multiple teams at different stages of EOR assessment and project development, Sohamie and Jacobs fosters cross-team collaboration – so as to share learnings and best practices. The task at hand for EORC is huge. Having to develop nine fields within the next twenty years is daunting but the reward of making breakthroughs is handsome. The team remains vigilant, ensuring the various projects under the Baram DeltaNorth Sabah venture progress well – as these pioneers keep their eye on the prize.

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Feature F ocus: Offshore EOR

Energy has spurred the growth of nations for decades and continues to fuel economies and human imagination. Rich sources of energy can be found within layers of humble and seemingly ubiquitous shale rock, often in remote places and in the toughest of terrains. People like Dr Chan Tuck Leong are traversing the globe to unlock this resource in order to light up megacities, keep us cool on a sweltering afternoon and power the internet that keeps families and friends connected. We’re going to need energy for the future. And we won’t stop looking. Empowering Lives. Watch the full story at www.youtube.com/PETRONASofficial www.petronas.com

Petroliam Nasional Berhad


IR. DR CHAN TUCK LEONG Pacific Northwest LNG


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PETRONAS does not encourage the giving of gifts or the provision of gratuitous services by PETRONAS’ contractors or sub-contractors, suppliers, bankers, dealers, or customers to its employees.


Energy rocks.

F eature F ocus : O ffshore E O R


A Win-Win Partnership Paul Atkinson has worked in Malaysia for 12 years, on three separate assignments since the mid-90s. Lundin Malaysia is focused on value growth in Malaysia through exploration. The company holds a large portfolio of exploration blocks in Malaysia, and has been one of the most active explorers in recent years in terms of seismic and drilling operations. Lundin Malaysia recently began oil production from the Bertam oil field offshore Peninsular Malaysia. 52

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Tell us how your partnership with Q1 PETRONAS came about? The Lundin group of companies have been operating in Malaysia since the early 1990s when it recognised that Malaysia was a good place for hydrocarbon exploration due to the large yet-to-find resources and the stable political and economic environment. Through our involvement in Production Sharing Contracts, Lundin quickly developed a strong working relationship with PETRONAS as the Host Authority, and PETRONAS Carigali as a joint venture partner in PM3 CAA, which became a very successful early development for Lundin Oil in the 1990s.


What are some of the more innovative aspects of the PSC?


Can you describe the terms of the PSC and how has it performed since its inception?


We are currently working under the Revenue over Cost (R/C) PSC terms. These terms encourage development of fields and reward cost effective investment. The adoption of these terms and the subsequent enactment of tax incentives for marginal fields are positive developments that have contributed to our success in Malaysia.

A large part of the remaining yet-to-find resources in Malaysia is contained within small fields of less than 50 million barrels. PETRONAS has worked with the Malaysian Government to obtain fiscal relief for PSC contractors working with marginal fields. Lundin and PETRONAS Carigali have developed the Bertam field that has qualified for marginal field status and access to tax incentives, and it is one of the first of such projects in Malaysia.

The assurance that priority is given to the recovery of exploration and development investment in a structured manner is important, as is the contractor takes after investment recovery. With the potential for a shift down of the oil pricing paradigm in the near term it will be important to closely monitor these components in order to ensure our continued investment. The experience of working with PETRONAS Q3 has been… Over the time that Lundin has been investing in Malaysia, PETRONAS has evolved into an experienced world-class player in upstream oil and gas and has become one of the most successful national oil companies in the world. Lundin has benefitted from working with such an experienced partner in Malaysia and globally. some of the challenges and how have Q4 they been overcome? Lundin Malaysia recently declared first oil for the Bertam oil field in Block PM307, which is a marginal field requiring close control of costs and schedules to achieve an economic return. PETRONAS provided guidance throughout the project, and particularly in the area of procurement where several high-value contracts were secured on schedule and on budget, allowing the project to achieve its targets. How has the structure of the PSC Q5 benefitTed your company? A key feature of the PSC is the early recouping of investment though cost recovery. Lundin has been careful to fully comply with the terms of the PSC, and has subsequently qualified for recovery of its project expenditures.

How does PETRONAS differ from other partners you have worked with?


PETRONAS has clearly defined processes for PSC management. This provides helpful guidance to PSC contractors in the execution of their work programmes, and clarity and certainty in our planning and budgeting. This environment makes a stable platform for investment and is in marked contrast to some other jurisdictions in the world. PETRONAS Carigali’s key strengths as a PSC

Q8 partner?

PETRONAS Carigali is a partner in every PSC in Malaysia and has vast collective knowledge and experience from operations here and internationally, which benefits our joint ventures. We find that PETRONAS Carigali is a supportive partner, and willing to participate in exploration and development that, by its very nature, can entail uncertainty and inherent financial risk. Having PETRONAS Carigali as a PSC partner also helps with our alignment with PETRONAS as the regulator and manager of the PSCs. Partnership with PETRONAS – how is that evolving?


Lundin has a strategy of value growth through exploration, which differentiates our company from many competitors. Lundin continues to be an active explorer in Malaysia and our objectives are very much aligned with those of PETRONAS. We want to discover new fields and develop them quickly and economically. From our time in Malaysia, Lundin has established a proven track record as a partner and contractor of choice. We hope that PETRONAS will continue to entrust the exploration and development of the national resource to our company, and we will dedicate our skills to that task.

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POLICY OF PEACE AND NEUTRALITY On 12 December 2015 Turkmenistan will celebrate the 20th Anniversary of its status of Permanent Neutrality, the second most important national holiday in Turkmenistan after Independence Day. By H.E. Yazkuli Mammedov Ambassador Extraordinary and Plenipotentiary of Turkmenistan to Malaysia

On 12 December 1995, at a United Nations General Assembly session, all 185 members unanimously adopted a special resolution on the “Permanent Neutrality of Turkmenistan”. This was a historic day for the people and Government of Turkmenistan. The adoption of the status of permanent neutrality was a strategic decision which demonstrates the country’s commitment to build harmonious relations with its neighbors and was aimed at promoting international peace and security.


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Turkmenistan had declared the country’s decision to adhere to principles of positive neutrality in its foreign policy in July 1992 at a Summit of the Commission for Security and Cooperation in Helsinki and received its first official recognition in March 1995 at the Summit of the Organisation of Economic Cooperation in Islamabad. This was further supported by the Summit of Non-Alignment Movement in Cartagena (Columbia) on 20 October 1995. The 20 years of neutrality has opened up vast opportunities for Turkmenistan including its proactive involvement in maintaining world peace and security, disarmament, countering new challenges and threats, promotion and protection of human rights and


Arch of Neutrality Ashgabat, Turkmenistan

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environment, food security, overcoming the effects of financial and economic crisis, development of science, as well as culture while strictly adhering to the commitment of developing peaceful, friendly relations with foreign partners on the principles of equality, mutual respect, mutual benefit and non-interference in the internal affairs of other nations. At present, under the astute leadership of President Gurbanguly Berdimuhamedov, Turkmenistan confidently moves forward, while achievements in socio-economic prosperity of the country are the best proofs of the country’s development.

2015 Declared Year of Neutrality and Peace The Turkmen people will recognise the upcoming 20th anniversary of neutrality in an environment of peace, good neighborliness, mutual respect and understanding with their friends and partners in the international community. It also demonstrates Turkmenistan’s enormous success, achieved in a short period under the leadership of the President of Turkmenistan H.E. Gurbanguly Berdimuhamedov.

THE ENERGY EQUATION With huge gas reserves, Turkmenistan is an important source of energy in the world. Large scale hydrocarbon projects, a favourable investment climate combined with an “Open Doors Policy” have brought numerous foreign companies to Turkmenistan. The widely used “Production Sharing Agreements”, that the Government of Turkmenistan has opted for, paved the way for the signing of a bilateral agreement between the Government of Turkmenistan and PETRONAS in July 1996 for exploration, development and production of offshore Block 1, some 80 km away from the town of Turkmenbashi. PETRONAS remains committed to the development of the oil and gas industry in Turkmenistan through innovation and has become a symbol of success in the field. The signing of a Memorandum of Understanding for long-term cooperation in hydrocarbon exploitation activities in June 2014 during the state visit of the Honourable Dato’ Sri Mohd Najib bin Tun Haji Abdul Razak, Prime Minister of Malaysia to Turkmenistan is yet another milestone in Turkmen-Malaysia relations.


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Turkmen people will recognise the upcoming 20th anniversary of neutrality in an environment of peace and creation, good neighborliness, mutual respect and understanding with their friends and partners in the international community.

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PETRONAS Carigali Turkmenistan Sdn Bhd (PC(T)SB) achieved another significant milestone when the West Diyarbekir (WDDP-A) platform commenced its first oil on 9 April 2015. This accomplishment marked the beginning of a new era for PETRONAS SB in increasing their crude oil production, which was discovered in Block 1, Offshore Turkmenistan, after the successful first commercial oil production from the “S. Turkmenbashy” Mobile Offshore Production Unit (MOPU) in May 2009.

The WDDP-A platform is part of the Diyarbekir Oil Field Development which started its production from an appraisal well through the MOPU in 2006. The WDDP-A platform, coupled with Central Diyarbekir Platform (CDDP-A) which is currently under drilling activities, is forecast to produce 15,000 barrels per day at its peak. The crude oil which is produced from WDDP-A will be delivered to the Magtymguly Collector Riser A (MCR-A) Platform and offloaded through a 73km pipeline to the existing Gas Treatment Plant Onshore Gas Treatment (GTPOGT) in Kiyanly, Turkmenistan. The new crude oil production will also offset the expected cessation of production from the MOPU due to the expiry of its classification certificate in March 2016. Since project commencement in 2012, the team had demonstrated great fortitude in facing various challenges and obstacles in terms of managing stakeholders, maneuvering logistics’ difficulties and withstanding extreme weather condition (as low as to -25oC) during the winter. “We are adding new volumes that can improve our profitability mix with crude oil and condensate from the natural gas volume in Magtymguly field. We would like to thank everyone involved in the project for their perseverance and dedication to achieve this remarkable milestone”, said Teh Yat Hong, Chief Executive Officer (CEO) of PC(T)SB. In addition, he applauded the safety record achieved, with zero fatality and Total Recorded Case Frequency (TRCF) of 0.2, an essential and integral aspect of the business which needs to be observed and implemented by all parties at all times. This milestone was also celebrated with the first visit by Mr Mekan Babaev, Acting Chairman of Block 1 Management Committee, from the State Agency for Management and Use of Hydrocarbon Resources at the President of Turkmenistan to WDDP-A Platform.

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FUTURE TALENT As the Managing Director, Asia Pacific at the Society of Petroleum Engineers (SPE), Cordella WongGillett has spent over two decades ensuring that professionals in the oil & gas industry have the relevant skills for a constantly evolving landscape.

The world is changing fast and Ms Wong-Gillett has been in the thick of the action for many years. She began her career at SPE’s international headquarters, in Dallas, Texas, in June 1983, and was responsible for the establishment, staffing, and start-up operations of the Asia Pacific Office, where she continues to oversee regional activities to achieve SPE’s mission of technology dissemination to its global membership. Today, with new and complex challenges of discovering and developing new petroleum resources - especially in a low oil price environment - Ms Wong-Gillett continues to lead the charge to provide professional knowledge sharing and business networking platforms for the industry to remain at the cutting edge. While technical skill sets are core to success, engineers have to apply the latest in technology while working in multidisciplinary teams. They also need to supplement their IQ with a big dose of EQ, as soft skills become increasingly


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important for success. Making jobs tougher is the recent plunge in oil prices, and the resulting staff consolidation across the industry has made the profession less attractive than before to the best graduate talents. You’ve been with SPE for over 20 years. Tell us about some of the trends you have observed during this time. What have been the noticeable shifts? SPE’s mission has and continues to be associated with the dissemination of technical knowledge. Consistent with this, we have always provided both technical training and various workshops and conferences that provide forums for knowledge interchange and personal growth through networking. Feedback from our stakeholders strongly indicate that these activities remain relevant today, while we have been providing a greater range of ‘soft skill’ capability development than previously. What are the key factors driving the need for “up skilling” in the industry? At today’s energy consumption rates, we have approximately 120 years of recoverable reserves. That breaks down to 40 years of conventional reserves and an additional 80 years of “unconventional” reserves. However, the industry faces

a constant challenge in discovering and developing new resources in increasingly complex and hostile environments. In order for these complex reserves to be economically accessed and others discovered, the need for technical and technological expertise will continue to be required, and, importantly, integrated in multi-disciplinary teams using leading edge information technology. All the old skills will still be required, but a wide range of new ones will be also. What are the biggest obstacles to talent development in the industry? Unfortunately, the recent downturn in oil prices has led to staffing consolidations across the industry. This has before, and will again, lead to the industry being seen as non-attractive for high quality graduates. The industry will continue to face and address this challenge. In addition, we need to continue to project our industry as essential to economic growth, environmentally responsible and high technology-driven. All these factors are the truth, but we do not always do the best job of communicating them, faced by often-hostile media and other institutions. Here again, SPE events provide a platform for the projection of these positive messages. How will the industry be impacted if it fails to develop sufficient talent and build relevant skills? A less talented workforce will be less efficient and will add to industry costs. The implication is that, in order for the new and more challenging resources to be accessed economically, petroleum prices will rise. With almost every product and service having an element of energy usage built into their prices, via manufacturing, storage and transportation costs, this will inevitably have a negative impact on global economic growth. The world needs a highly talented petroleum industry workforce to provide affordable energy that drives economic growth and increase standards of living. Is the industry looking for fresh talent from non-traditional sources? The industry has always cast its net widely when recruiting talent. While SPE is concerned with developing Petroleum Engineering knowledge, many of our members have educational qualifications associated with other disciplines,

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such as Chemical, Civil and Mechanical Engineering as well as Geoscience disciplines. More broadly, opportunities exist within the Petroleum industry for people with IT, HSSE, Finance, Legal, Human Relations and other backgrounds. Development opportunities for IT professionals in particular, in this high tech industry, are growing significantly. How does PETRONAS rank in terms of investment in talent and capability development vis a vis other oil and gas players in the market, based on your observations? PETRONAS has always, both for business reasons and more broadly as part of its contribution to Malaysian society, invested consistently in this area. I would say that PETRONAS ranks among the very best in the industry in skill development, in every area of business in which it operates. Its continued investments in SPE-organised activities such as the International Petroleum Technology Conference and the Offshore Technology Conference Asia, along with its support of technology workshops, is direct evidence of this. Hands-on experience is often said to be the best educator especially in sectors that are high risk such as oil and gas. With oil and gas companies laying off the more senior, and hence experienced, people, how can we close the experience gap? The cyclicality of our industry remains a significant challenge. The loss of experience makes hands-on learning more difficult. This is why SPE works very closely with all industry players to make sure that our offerings take this into account, and best leverage the experience that remains. This is a critical aspect of our mission. In what ways is SPE playing a role in driving collaboration and innovation for the industry, especially given the oil price drop recently? We have been through this before, and we know how to address this matter. Obviously, the broader industry will be financially-challenged while this environment persists. SPE will play its part to ensure that our offerings are fit-for-


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purpose, cost effective, and for a volunteer driven, membercentric professional society, meet the needs of our members, sponsors and supporters in whatever environment we face. Specifically, while addressing current conditions, we know that these are constantly changing; we must ensure that, wherever possible, our programmes are consistent with a range of future industry outlooks. Is the industry oversupplied with talent? In a word, no. Our industry is blessed with some of the brightest minds in the world; we continue to discover and develop resources in ever more difficult conditions, and face the pressures associated with any supply and demanddriven extractive industry. However, we can never afford to be complacent. I cannot think of any other industry whose continued performance excellence provides the global economy with a commodity so important to development and living standards. We have an outstanding record, and our ability to attract and retain talent and capability are key to maintaining, and even improving, that record. Where do you see the greatest need for talent development and upskilling? Personally, I see the challenge as twofold. Firstly, the industry requires ever more deep and specific functional capability, knowledge and experience. I think we know how to do this. An emerging and more difficult issue, which we are at the early stages of addressing, is how to ensure the best and most efficient integration of these skills via networking, information technology and the improvement of the soft skills required. This is vital in ensuring that the highest capability resources have the best technology tools to address the most difficult problems in a multi-functional way. Those organisations that develop the optimal combination of deep functional capability, integrated through experienced ‘generalists’ and effective tools will be the industry leaders in the future and SPE will continue to play a significant role in facilitating this.


“ I cannot think of any other industry whose continued performance excellence provides the global economy with a commodity so important to development and living standards.“

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