Royal Dutch Shell Group .com Nippon Oil Starts Commercial Gas Production In Malaysia


Monday June 21, 6:20 AM


TOKYO (Dow Jones)--Japan's Nippon Oil Corp. (5001.TO) said Monday its oil and gas exploration unit has earlier this month started commercial production of natural gas at the Serai offshore gas field in Malaysia.


Nippon Oil Exploration Sarawak started commercial gas output at the field June 9 and will deliver natural gas via a pipeline to a liquefied natural gas plant in Bintulu, Nippon Oil said in a statement.


Shell Malaysia, a unit of Royal Dutch/Shell Group (RD) is the main project operator. It holds a 37.5% interest in the Serai gas field which is in the SK-8 block off Sarawak, East Malaysia, while Nippon Oil owns a 37.5% stake and Petronas Carigali holds 25%.


Nippon Oil estimates the field will have a maximum gas production of 8 million cubic meters a day, equivalent to 2 million tons a year of LNG.


Production at the Serai field comes after Nippon Oil Exploration Malaysia, another Nippon Oil unit, started commercial production in November at the Halang gas field in the SK-10 block, Malaysia.


The LNG plants in Bintulu are owned by Malaysia LNG Tiga Sdn. Bhd., a joint venture led by Malaysia's state-run Petronas (PET.YY). Nippon Oil holds a 10% equity stake in the joint venture. Malaysia LNG Tiga has two LNG plants in Bintulu with a combined capacity of 6.8 million tons/year.


Next month, Nippon Oil is set to begin gas production at the Jintan gas field in the SK-8 block. The daily gas output is estimated at 14 million cubic meters a day, or 3.2 million tons of LNG.


Malaysia LNG Tiga sells LNG cargoes to Japanese and South Korean gas and power utilities under long-term supply contracts.

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