Malaysian contractor MISC has begun the conversion project that will see Chevron replace the floating storage and offloading unit the US supermajor currently employs on the Block B8/32 in the Gulf of Thailand.

The aframax tanker Bunga Kelana 5 is being converted into the Benchamas 2 FSO, which will replace the Benchamas Explorer that has been operating on the block for nearly two decades.

MISC Offshore Floating Terminals beat off competition from a host of contractors – said to include Japan’s Modec, Singapore’s Omni Offshore and others – to land the conversion deal.

The new unit will be able to store 750,000 barrels of crude – well above the 650,000 barrels it was thought was being sized up for the project. Built in 1999, the Bunga Kelana 5 is 105,400 dwt and has been operated by MISC’s wholly-owned affiliate AET.

A ceremony was held at Malaysia Marine Heavy Industries’ West Yard in Pasir Gudang on Wednesday to commemorate the commencement of the conversion project. Sailaway to the block off Thailand is expected in the first half next year.

The charter deal represents MISC’s maiden foray into Thailand’s offshore oil and gas sector. It is worth $230 million over a 10-year charter period, with Chevron holding five one-year extension options.

The Benchamas Explorer has been operating in Block B8/32 since 1999, initially under the ownership of Tanker Pacific Offshore Terminals, now Omni Offshore, and then Chevron took ownership of the FSO in 2009.

The concession area B8/32 & B9A is one of many that Chevron operates in the Gulf of Thailand’s Pattani basin.

It is a 2072 square kilometre area in water depths between 42 metres and 113 metres. The permit area contains seven producing fields — Tantawan, Benchamas, Maliwan, North Jarmjuree, Benchamas North, South Jamjuree and Chaba.

According to joint venture partner KrisEnergy, gross cumulative production up until 31 December 2015 from B8/32 is 454 million barrels of oil equivalent, and there are remaining proven and probable reserves of 226 million boe.

The B8/32 licence hosts dozens of wellhead platforms, a central processing platform and living quarters, two FSOs, one floating production, storage and offloading vessel, and hundreds of kilometres of interfield pipelines. The joint venture partners are Chevron on 51.66%, PTTEP on 25%, Mitsui Oil Exploration on 16.71%, KrisEnergy on 4.63% and Palang Sophon on 2%.