MALAYSIAN national oil company Petronas has suffered a setback on its first deep-water oilfield development in Malaysia, and in the process has unsettled the contracting sector.
Four Malaysian bidding groups are competing forthe contract to provide a floating production, storage and offloading vessel for Limbayong, as the development is known.
The four are Yinson Holdings, MISC, Sabah International Petroleum (SIP) and Bumi Armada — the latter acting in partnership with compatriot MTC and India's Shapoorji Pallonji.
A lucrative lease and operate contract is up for grabs with a firm 12-year period, plus a pair of options each for three years and another for two years.
Sabah International was said to be in a favourable position to land the contract even though the other contenders were still in the race.
However, according to multiple market sources in Kuala Lumpur, the bidding exercise has been suspended.
Most of these sources expected a completely new invitation to tender to be issued soon, although some suggested that the suspension was more of a delay than a re-bid, allowing Petronas to address procedural issues. Petronas did not respond to a request from Upstream for an update on the Limbayong project, which the corporation thrust into the spotlight in June this year when it held a ceremony to mark a significant subsea equipment contract to TechnipFMC.
With TechnipFMC already working on its contract, and Petronas having previously extended the validity of the FPSO bids to the end of October, there were few suggestions that the project has actually been cancelled.
However, high-ranking Kuala Lumpur-based sources suggested a political clash of heads with the state of Sabah is having a direct impact on the FPSO contest.
Sabah state government has been pushing for greater participation and local content in projects in its own waters.
Issuing a new tender will require urgent discussions to take place on how to move forward, said sources. One unexpected solution that sources raised was that the nearby Bestari oil discovery, which was earmarked as a tie-in field to Limbayong, might host the FPSO instead of Limbayong.
The final investment decision for Bestari is due soon, and sources suggested that developing Bestari first could deliver a better economic outcome.
The Limbayong FPSO — as per the original tender specifications — was to offer production capacity of 60,000 barrels per day of liquids, including 40,000 bpd of
oil, plus about 180 million cubic feet per day of associated gas. Water injection facilities for up to 75,000 bpd would also be
included. The floater was expected to have nameplate storage capacity of 600,000 barrels of oil.
Meanwhile, contenders to supply the external turret for the Limbayong FPSO included Bluewater, SOFEC, National Oilwell
Varco and London Marine Consultants.
In June 2021, Petronas staged a ceremony to award the Limbayong subsea production system and subsea umbilical, riser and flowline contract to TechnipFMC.
The workscope was to cover 10 deep-water wells tied back to the FPSO, the SURF package, plus a gas-export pipeline of about 60 kilometres in length to the existing shallow-water Kinabalu non-associated gas platform, KNGP-B.
The project was to be executed from the contractor’s Kuala Lumpur office and would leverage its local manufacturing plants in Malaysia.
Proven and probable reserves at the Limbayong field are estimated at 139 million barrels of oil and 784 billion cubic feet of non-associated gas, according to sources.
Water depths at the field, which straddles blocks G, J and R offshore the state of Sabah, range to in excess of 1200 metres.
Petronas is understood to operate Limbayong with a 90% interest with E&P Malaysian Ventures on 10%