By M K Anwar

Bandar Seri Begawan - Petroleum Brunei in its pursuit to secure a sustainable energy future for the country yesterday signed a Production Sharing Contract with consortiums that have been awarded the rights for onshore Blocks L and M.

The event took place yesterday at The Empire Hotel and Country Club.

Present as the chief guest and to witness the momentous occasion was the Minister of Energy at the Prime Minister's Office, Pehin Dato Awang Hj Yahya.

Loon Energy Inc. and QAF Brunei Sdn Bhd consortium has been awarded the tender for Onshore Block L, which covers an area of 2,253 square kilometres.

The block occupies the whole of Brunei-Muara District and parts of Tutong and Temburong Districts.

Meanwhile, another consortium comprising ChinaOil USA (Macao) Company Ltd (ChinaOil), Valiant International Petroleum Ltd and Jana Corporation Sdn Bhd has successfully bid for Onshore Block M.

These onshore blocks were opened for tender last August and the winners were announced in February this year.

Acting Chief Executive Officer of Petroleum BRUNEI, Mohammad Reduan Hj Mohd Yussof, called the event as another historical milestone in the nation's oil and gas industry during his welcoming address.

The agreement, said the Acting CEO, encapsulates the accord that had been reached between PetroleumBRUNEI and the consortiums following several months of negotiations.

Talking on the current oil market, Mohammad Reduan said crude oil prices are still hovering above $70 per barrel and industry experts have generally concluded that the days of cheap oil are over.

"For us in PetroleumBRUNEI, what potentially lies underneath those two onshore blocks are more than just prospects of hydrocarbons or returns on investments.

"They also hold the prospect of providing greater opportunities for everyone.

"God willing, the two onshore blocks would bring with them the prospects of adding to the nation's petroleum reserves and for the people greater employment opportunities," he added.

According to the Acting CEO, a two-phased exploration period for each of the blocks will commence following the execution which will involve a total minimum investment of more than B$80 million, with B$50 million committed to the first phase alone.

Meanwhile, in an acceptance speech, Mr Timothy M Elliot, Chief Executive Officer of Loon Energy Inc, who is representing the Block L consortium, thanked its partner QAF Brunei for the unfailing support and cooperation.

The spirit of cooperation, said the CEO, has governed the negotiations and all issues that arose were resolved in a positive and constructive way.

Mr Elliot said the Production Sharing Agreement marks the beginning of their journey to embark upon the exploration of Block L. "It is interesting to note that this block has not produced any oil and gas since 1962 and that the last oil well in the block was drilled in 1986," he added.

Explaining on the joint venture, he said that in the next three years, more than US$20 million will be spent in acquiring new seismic data and drilling at least two wells to a depth of 2,000 metres.

Mrs Ann King, Managing Director of Valiant International Petroleum Ltd, representing the consortium of the Block M partnership, hailed their partnership adding that everyone was playing their part.

The Block M consortium, consisting of ChinaOil USA Macao, the local Jana Corporation and Valiant International Petroleum, she said, has overcome the challenges of cultural differences and language.

"We look forward to employing Bruneian staff at all levels in our organisation, in the transfer of knowledge, technology and the encouragement of other local businesses."

On the history of Block M, she 'said exploration had begun in the early 1900s -and led to the first oil discovery in Brunei at the Belait 2 well. Exploration was brought to a halt in the late 1980's in part due to the low oil prices.

"With the high oil prices, modem technology and sound technical know how, an excellent partnership and support from His Majesty's Government through PetroleumBRUNEI, it is time to fully explore the hydrocarbon prolific reservoirs on the Block M acreage," Mrs Ann King said.

The ceremony proceeded with the signing of documents between PetroleumBRUNEI and the Block L consortium executed by its PetroleumBRUNEI Acting CEO and witnessed by Hj Iskandar bin Hj Yahya, its Business Asset Manager. On behalf of Loon Energy Inc, CEO Timothy M Elliot signed and was witnessed by Jack Graham, its Vice President. While for QAF Brunei Sdn Bhd, documents were signed by Dato Paduka Chua Pheng Siong, General Manager (Business Development), and witnessed by Ho Lee Suom, its Corporate Affairs General Manager.

The next signing was between PetroleumBRUNEI and the Block M consortium. Signing on behalf of PetroleumBRUNEI was Acting CEO and its Business Asset Manager while for Jana Corporation Sdn Bhd the signing was done by its Chairman, Pg Anak Hj Ja'afar ibni Al Marhum Pg Pemancha Pg Anak Hj Mohd Alam.

For ChinaOil USA (Macao) Co. Ltd, its Chairman and Managing Director Mr Lam Nam signed on the dotted line and witnessed by its Vice Chairman, Mr Eric Lai. For Valiant International Petroleum Ltd it was Mrs Ann King who signed and was witnessed by its Director, Mr Michael Fletcher.

Also attending the ceremony yesterday were senior ministers and deputy ministers, government officials, members of the diplomatic community and prominent businessmen. -- Courtesy of Borneo Bulletin