Spanish operator Repsol has agreed to sell its upstream assets in Malaysia and in Block 46 CN offshore Vietnam to Kuala Lumpur-based Hibiscus Petroleum.

The transaction – financial terms of which were not disclosed – includes a 35% interest in the PM3 CAA production sharing contract, 60% in the 2012 Kinabalu Oil PSC, 60% in the PM 305 PSC, 60 % in the PM 314 PSC, and 70% in Block 46 CN in Vietnam, a tie-back asset to the PM3 CAA production facilities.

These assets represent approximately 2% of Repsol’s global current net output.

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Norwegian consultant Rystad last year estimated that Repsol could realise between $200 million and $250 million for its Malaysian assets. The operator is sitting on some 78 million barrels of oil equivalent of resources there, divided almost equally between oil and gas.

Repsol on Tuesday said the transaction supports the "broader rationalisation” of its global portfolio, within the framework of its 2021-2025 strategic plan that focuses on the geographic areas with the greatest competitive advantages.

Hibiscus could not be reached for immediate comment on the deal.

"Lean modular development"

Repsol is concentrating its upstream activity on 14 key projects centered around producing basins and executed through “lean modular development, prioritising value over volume”.

The operator is not turning its back on E&P in Southeast Asia.

Repsol has a non-operated stake in ConocoPhillips' producing Corridor PSC onshore Indonesia. Also this year Repsol is preparing to drill - with partner Petronas - a high impact exploration well targeting the Rencong gas prospect offshore Indonesia, a keenly watched wildcat that was delayed amid the fallout of the coronavirus pandemic.

The Rencong-1X well will target an Oligocene carbonate build-up, “possibly similar to [the] Arun gas field located onshore”, Westwood Global Energy Group senior analyst, Jamie Collard, earlier said.

The Andaman III production sharing contract, which hosts the Rencong prospect, is touted by exploration analysts and the Aceh provincial authorities as having between 3 trillion and 4 trillion cubic feet of gas resource potential.

Repsol has already sold its producing assets in Russia, halted its oil production activities in Spain and exited exploration activity in other countries.

The company added the funds raised from its Malaysian and Vietnamese assets sale to Hibiscus, as well as the resulting capex savings, would contribute to the global strategic goal of funding core projects and new low-carbon initiatives.

This deal is subject to regulatory approval and the waiver of partners’ pre-emption rights.