RENAME OIL FIELD BLOCK L AND M?

THE BACKGROUND of the highly speculated talks on the off shore rich oil field near Sabah has finally come to light after a Parliament reply was made on the 16th of October 2012 concerning the matter. The disputed issue on this is whether or not the two blocks of huge oil field have been surrendered to Brunei.

The answer from the Ministry of Foreign Affairs stated that the matter had been resolved between Malaysia and Brunei Darussalam on the Block L And M, and this is done through the process of 'Exchange of Letter' on the 16th of March, 2009.

This arrangement has successfully ironed out and resolved the overlapping claims and maritime border dispute where both the nations had based it on the principles and policies involving international maritime border and the international laws which is under the "United Nations Convention on the Laws of the Sea (UNCLOS) 1982.

Through the process of the Exchange of Letter, the two nations had also agreed to adopt a 'Commercial Arrangement' to enable a sharing on the exploration rights to search for hydrocarbons reserve in the Block L and M in the Brunei maritime zone.

For the purpose of working together, the Block L and M are renamed to Block CA1 and Block CA2. The agreement on the Production Sharing Agreement (PSA) for Block CA1 was signed in Putrajaya on the 21st of September 2010, and for the Block CA2 was signed on the 13th December in Bandar Sri Begawan. The two PSA were sealed by Petronas and Petroluem Brunei together with other appointed operators and contractors.

The joint exploration on the hydrocarbon reserve in Block CA1 and CA2 is in progress since the end of year 2011.

KKMP Hiew King Cheu said the Foreign Affairs Ministry should provide more details on the so called sharing arrangements, and who and what company from Malaysia was 'given' the rights and contracts on the exploration and production of the hydrocarbon in Block CA1 and CA2.

Furthermore, in the ministry reply stated that the 'Commercial Arrangement' agreement specifically mentioned that the sharing on the production of hydrocarbon from Block CA1 and CA2 found in the 'Brunei Maritime zone' had raised another doubts. Is it meaning that the two blocks is officially no longer Malaysia Maritime zone?

It will be interesting to know whether Sabah will be given our usual 5% oil royalty from this oil field when the crude oil is flowing.