Shell to move deepwater facility to Sabah

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KOTA KINABALU: Shell is in the midst of completing fabrication activities for Malikai Tension Leg Platform (TLP) in Johor and will soon be moving the platform to offshore Sabah.

“We are currently completing the fabrication activities for Malikai TLP in Johor, and will soon be moving the platform to offshore Sabah where the final phases of hook up and commissioning activities will start,” said Sabah Shell Malaysia general manager Ian Lim.

Malikai will be the second deepwater facility of Shell, one of the two mega projects the company invested in with its joint venture partners.

On the other mega project, Gumusut Kakap, Lim said it was Shell’s first deepwater project in Malaysia in 1,200 metres water depth.

“Together with my project team, we started up the Gumusut Kakap semi-floating production system (FPS), processing crude from sub-sea wells, exporting the oil to Sabah Oil and Gas Terminal in Kimanis and reinjecting the associated gas back into reservoir.”

Lim said Shell had invested extensively in deepwater opportunities in Sabah, which provided economic benefits to the country and the State.

He said that in his keynote address at the fifth Sabah Oil and Gas Conference and Exhibition (SOGCE) organized by IEC Midas here. The event was officiated by Deputy Chief Minister cum Minister of Industrial Development, Datuk Seri Panglima Raymond Tan Shu Kiah, representing Chief Minister Datuk Seri Panglima Musa Haji Aman.

Lim said Shell, as the operator on behalf of its joint venture partners, produced about 60 per cent of the State’s total oil production.

“We have a strong collaborative relationship with the State Government, Petronas, our partners Petronas Carigali, Conoco Phillips, Murphy, and many contractors, working together to mature the industry in the State.”

In downstream, Lim said Shell’s presence was deeply rooted to the local market, under Shell Timur Sdn Bhd of which the Sabah State Government held 15 per cent equity through Innoprise Sdn Bhd.

Today, Lim said Shell saw a tough price environment for the industry in which oil price has dropped significantly but costs have not reduced in pace with the drop.

“As such, revenue for the industry has dropped sharply, forcing the entire industry to take adjustments in order to remain in business.

“These includes deferring or stopping projects and restructuring to lower costs.”

In Sabah, Lim said Shell were facing challenges in mature assets with increasing unit operating costs in a operating low oil price environment, as well as deepwater assets with complex and challenging operating environments due to the much deeper water depths.

Nonetheless, he said Shell was committed to stay in business for the long term, which required a new balance that focused on growing its deepwater business, being more competitive and efficient, and nuturing local talent.

On growing its deepwater business, Lim said Shell took the decision to set up an additional office in Kota Kinabalu at Plaza Shell to bring together all of its staff supporting the deepwater assets who used to be working in Miri and Kuala Lumpur.

“The combination of the physical colocation and implementation of Shell processes and best practices has enabled our staff working across different functions to collaborate very effectively leading to improved facility performances and excellent reservoir management practices that are critical for efficient and competitive deepwater operations.

“Shell has a significant global deepwater portfolio and with our Malaysian and Sabahan talents. We have leveraged on our global experience and expertise from operating and developing other deepwater fields in the US GOM, Nigeria, Brazil.

“This has enabled us to execute projects like Malikai successfully, operate Gumusut Kakap competitively and to also bring in innovative and cost effective solutions as we pursue additional opportunities in Sabah with our joint venture partners,” he said.

On another note, Lim said Shell would like to play a larger role in connecting government and educational sectors with some of its key contractors in order to deliver what the industry required and further enabled the local content agenda.

He said the deepwater business would hopefully provide opportunities for Sabahan companies to learn and build up capability in this niche area.

“Deepwater flow assurance knowledge, operating floating facilities and sub surface engineering are amongst the areas where we still have capability gaps both in numbers and experience.”

He added that having a presence here in Sabah together with Petronas Carigali and joint venture partners would hopefully inspire more Sabahans to consider an oil and gas career, especially in the sub surface disciplines.

“As someone who has been fortunate enough to grow personally in Shell and be part of the State’s and country’s oil and gas industry growth, I am motivated to enable the same opportunity to fellow Sabahans,” he said.