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Shell starts oil production from Malaysia's Malikai deepwater platform

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Singapore — Shell has started oil production from the Malikai Tension-Leg Platform, located 100 km offshore Malaysia's Sabah state, the company said Wednesday.

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Malikai will be Malaysia's fourth deepwater project after the Kikeh, Siakap-North Petai, and Gumusut Kakap fields, and is expected to have a peak production of 60,000 b/d.

The project start-up has arrived at a time when oil producers are coordinating efforts to reduce global supply.

Malaysia is targeting an output cut of 20,000 b/d from its estimated production of 700,000 b/d over the period January-June 2017.

With this decision, Malaysia became one of 11 non-OPEC oil producers to agree an output cut, following OPEC's announcement in late November to freeze the group's supply at 32.5 million b/d with the aim of speeding the market's rebalancing and boosting producer coffers.

Malikai is Shell's first TLP facility in Malaysia and second deepwater project in the country, following the start-up of the Gumusut-Kakap platform in 2014.

"Malikai marks an important milestone for Shell, its partners, Sabah and Malaysia," Shell upstream director Andy Brown said in a statement. "The project has demonstrated our capability in delivering competitive deepwater projects utilizing our global expertise."

Shell's deepwater business currently produces 600,000 b/d of oil equivalent globally, with another two Shell-operated projects under construction or pre-production commissioning, Coulomb Phase 2 and Appomattox in the US Gulf of Mexico.

"Deepwater production is expected to increase to more than 900,000 boe/d by the early 2020s from already discovered, established reservoirs," Shell said.

The project's partners -- operator Shell (35%), ConocoPhillips Sabah (35%) and Petronas Carigali (30%) -- made a final investment decision on the Malikai project in 2013.

In a separate statement, Malaysia's Petronas said the Malikai development is to become a tieback to the Kebabangan platform, which will be ultimately incorporated into the Sabah-Sarawak Integrated Oil and Gas Project (SSIOGP).

The integration of Malikai into Kebabangan constitutes the Northern Hub, whereas Kikeh and Gumusut Kakap constitutes the Southern Hub, Petronas' statement said.

Encik Muhammad Zamri Jusoh, Petronas VP of Malaysia Petroleum Management, said: "Development of these hubs has generated significant value to Petronas and the nation as we strive to exploit more deepwater opportunities in Malaysia, especially in Sabah waters."

--Abache Abreu,
--Edited by Maurice Geller,