"Aiming to Become the Second Myanmar Myth"… POSCO Inter Secures Exploration and Operation Rights for Malaysian Block

Securing 4 Years of Exploration and 24 Years of Development and Production Period for PM524 Block

POSCO International signed a production sharing contract for the PM524 offshore block in the eastern Malay Peninsula with PETRONAS, Malaysia's largest state-owned oil company in Southeast Asia, on the 1st. POSCO International secured a 4-year exploration period and a 24-year development and production period for the PM524 block (photo).

Photo by POSCO International

[Asia Economy Reporter Ki-min Lee] POSCO International has acquired exploration and operation rights for an offshore block in Malaysia with high potential for natural gas reserves, aiming to create a 'second Myanmar miracle.'

On the 1st, POSCO International announced that it signed a production sharing contract for the PM524 shallow water block in the eastern Malay Peninsula with PETRONAS, Malaysia's largest state-owned oil company in Southeast Asia.

The event was held via video conference attended by Ju Si-bo, President of POSCO International; Adif Zulkifli, President of PETRONAS Upstream; and Hasriza Osman, President of PETRONAS Carigali.

After being selected as the successful bidder for the PM524 block through an international tender in August, POSCO International finalized the production sharing contract after coordinating detailed terms with the Malaysian government and PETRONAS Carigali (a 100% PETRONAS-owned E&P subsidiary). The PM524 block is located in a shallow water area with a depth of 50 to 80 meters off the east coast of the Malay Peninsula, where Malaysia's capital Kuala Lumpur is situated, covering an area of 4,738 km².

POSCO International, as the operator, will hold an 80% stake, while PETRONAS Carigali will hold 20%. The production sharing contract stipulates that upon successful exploration, the contractor first recovers investment costs from a portion of the produced oil and gas, and then the remaining production is shared between the government and the contractor at a predetermined ratio. This contract type is commonly applied in major oil-producing countries in Southeast Asia and elsewhere.

POSCO International has secured a four-year exploration period including block operation rights, and a 24-year development and production period. Accordingly, by 2024, the company plans to evaluate the block’s potential using the latest technologies such as 3D seismic reprocessing, and from 2025, it will commence exploratory drilling to discover gas, with plans to sell the gas domestically within Malaysia if found, POSCO International explained.

Within and near the PM524 block, there are multiple gas fields operated by PETRONAS supplying gas to onshore terminals via pipelines. If POSCO International succeeds in gas field exploration in the PM524 block, it is also considering linked development utilizing nearby production facilities. If realized, this could shorten initial gas field development costs and development periods.

President Ju Si-bo stated, "The Malaysian government is accelerating the development of eco-friendly energy technologies led by PETRONAS, the state oil company, alongside its 2050 carbon neutrality declaration. To achieve the shared goal of carbon neutrality, we will expand our partnership and play a pioneering role in the POSCO Group’s overall carbon neutrality plan through CCS (carbon capture and storage) and blue and green hydrogen production utilizing gas fields."

Adif Zulkifli, President of PETRONAS Upstream, said, "We expect that applying POSCO International’s CCS technology in Malaysia will enhance the potential for green energy production."

This content was produced with the assistance of AI translation services.