Wisma Putra confirms oil blocks to be jointly developed

By Adib Zalkapli

KUALA LUMPUR, May 3 — The Ministry of Foreign Affairs today confirmed that a disputed oil rich area would be jointly developed by Malaysia and Brunei following an agreement reached in March 2009.

In a statement, Wisma Putra also confirmed that the areas known as Block L and Block M are recognised to be within the Brunei borders under the agreement or exchange of letters signed by the then Prime Minister Tun Abdullah Badawi (right).

“Malaysia’s oil concession Blocks L and M which coincided with Brunei Darussalam’s Blocks J and K are recognised under the Exchange of Letters as being situated within Brunei Darussalam’s maritime areas, over which Brunei Darussalam is entitled to exercise sovereign rights under the relevant provisions of the United Nations Convention on the Law of the Sea 1982 (UNCLOS 1982),” said Wisma Putra in the unsigned statement.

It added that the agreement also covers the establishment of a Commercial Arrangement Area (CAA) for oil and gas and steps to establish permanent land maritime borders with Brunei.

“The establishment of the CAA incorporating these Blocks provides for a sharing of revenues from the exploitation of oil and gas in the CAA between the two States,” said the ministry.

“The termination of the Production Sharing Contracts covering Blocks L and M which were awarded by Petronas to Petronas Carigali Sdn Bhd and Murphy Oil in 2003 is in accordance with the establishment of the CAA as provided for in the Exchange of Letters,” it added.

Late last week both former Prime Minister Tun Dr Mahathir Mohamad and the DAP’s Lim Kit Siang demanded an explanation from Abdullah after news reports emerged suggesting Malaysia had signed away its oil rights.

Murphy Oil, which had entered a production-sharing contract with national oil company Petronas, for Block L and Block M offshore of Limbang, announced last month that it was ceasing operations because “it was no longer part of Malaysia.”

Abdullah denied that he had surrendered the oil rich areas with potential oil earning worth RM320 billion to Brunei saying that it would be jointly developed by the two countries for a period of 40 years.

Dr Mahathir accused Abdullah of surrendering the two blocks ????, just three weeks before his departure in exchange for Brunei dropping its claim over Limbang in Sarawak.

The fifth prime minister explained that the agreement with Brunei aimed at solving long standing border dispute, was signed with prior approval from the Cabinet.

Petronas wants it ALL , wants Murphy Oil OUT ! that's my take !