Published: Saturday May 1, 2010 MYT 9:32:00 AM
Updated: Saturday May 1, 2010 MYT 2:41:14 PM
Petronas: M'sia, Brunei to jointly develop 2 oil-rich areas
KUALA LUMPUR: Petronas has been invited by the government of Brunei to enter into an agreement to develop the two blocks of oil rich areas in the South China Sea on a commercial arrangement basis.
In a statement here on Saturday, the national oil company said it had since set up a team that had begun negotiations with Brunei to work out the terms of this commercial arrangement.
"Both parties are committed to arriving at a mutually beneficial arrangement as soon as possible," it said.
Petronas said it also wished to clarify reports on the offshore exploration areas designated as Blocks L and M following the execution of the Exchange of Letters between Malaysia and Brunei on March 16, 2009.
"This exchange was a culmination of a long-standing issue between the two countries to arrive at a mutually beneficial arrangement, which allowed Petronas to enter into new production sharing contracts for both blocks.
"Petronas confirms that following the exchange of letters, the production sharing contracts covering Blocks L and M, which were awarded in 2003 to Petronas Carigali Sdn Bhd and Murphy Sabah Oil Co Ltd were formally terminated on April 7 this year as these are no longer part of Malaysia.
"Blocks L and M are redesignated as Blocks CA1 and CA2 respectively," it said.
The controversy over the two blocks have arisen after former Prime Minister Tun Dr Mahathir Mohamad had in a blog posting asked why the two blocks no longer belonged to Malaysia.
Dr Mahathir said the two blocks had been claimed by Malaysia based on historical facts.
In response, former Prime Minister Tun Abdullah Ahmad Badawi had refuted claims that he signed away Malaysia's rights over the two blocks.
Abdullah had said that he signed the agreement after the Malaysian Cabinet approved the deal on Feb 11, which stated that while sovereign rights over these two areas belonged to Brunei, it also allowed Malaysia to participate in jointly developing the areas for 40 years.