ConocoPhillips likely to pull out from RM13.7 bln Sarawak project
This move by ConocoPhillips' is said to be driven in part by the uncertain regulatory environment arising from the spat between Petronas and the Sarawak state government. — Photo from ConocoPhillips
KUCHING (April 29): US-based oil firm ConocoPhillips is reported to have decided to withdraw from operating the Salam-Patawali deepwater oil and gas field offshore Sarawak in what is said to be a 'country strategy review'.
The project was originally discovered in 2018 by ConocoPhillips with Petroliam Nasional Berhad (Petronas) in a 50-50 joint-venture that was expected to cost RM13.7 billion.
The Salam-Patawali exploration block encompasses 300,000 net acres primarily in the Salam and Benum fields off southern Sarawak.
According to Channel News Asia (CNA), this move by ConocoPhillips' was driven in part by the uncertain regulatory environment arising from the spat between Petronas and the Sarawak state government.
The report quoted two industry sources close to ConocoPhillips who separately confirmed the pullout, adding that the move was part of a 'country strategy review', which the company did not elaborate on.
The industry executives said that ConocoPhillips would now be focusing on its activities in neighbouring Sabah, where it already has operations.
The report further quoted a senior executive of a Western oil contracting firm based in Kuala Lumpur as saying: 'The sentiment is that foreign companies are uncomfortable because they see that Petronas is under pressure in Sarawak and the oil company (Petronas) is often the joint-venture partner in many exploration projects.'
This development comes as Sarawak continues to bid for greater control over its natural resources, challenging Petronas' monopoly under the 1974 Petroleum Development Act.
Sarawak formed Petroleum Sarawak Berhad (Petros) to assert rights, citing provisions within the Malaysia Agreement 1963 and constitutional state autonomy.
Legal disputes include claims over resource management and a bank guarantee for gas supply.
Sarawak maintains that its Oil Mining Ordinance and Land Code laws take precedence.
This conflict holds implications for governance, regulatory certainty, and foreign investments in Malaysia's oil and gas sector. ConocoPhillips lead Petronas Petros Salam-Patawali
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