Exploiting the estimated 3.2 trillion cubic feet of recoverable gas reserves hosted in the Kasawari sour gas field off Malaysia has been a long time coming and there are still hurdles to be overcome, writes Amanda Battersby.

Operator Petronas originally targeted a 2019 start-up date for Kasawari with peak production of 900 million cubic feet per day envisaged. However, it now seems likely that the final investment decision will not be taken until the middle of next year at the earliest.

Among the challenges, industry sources suggested Petronas could yet return to the market with another open tender process if it cannot agree an acceptable price for the large central processing platform with preferred contractor Malaysia Marine & Heavy Engineering.

Such a move could add further months to the already delayed project schedule.

Perhaps most importantly, Petronas has to try to reach an acceptable agreement with the Sarawak state government on the latter’s participation in Kasawari or how it will compensate the state for its production.

Sarawak has made some bold claims about the oil and gas sector recently, not least stating that going forward it will have ownership and control over its oil and gas resources.

This unresolved issue is said to be the main reason why the CPP contract award was not finalised in January or February as had been hoped and why the project had again stalled.

There has been no public talk yet on whether there has been a breakthrough on the issue of Sarawak's participation. The latest upsurge in tender discussions on Kasawari, which has brought to an end a period of apparent inactivity in previous months, could be seen as reason to hope for progress on that front, though contractors and others are unlikely to be taking anything for granted yet.

Kasawari is one of Malaysia’s largest non-associated gas fields, albeit one that contains between 30% and 40% carbon dioxide. This high CO2 content is understood to have been the main reason why the national oil company originally sought a strategic partner or partners to take up to 49% equity in its Block SK 316.

However, despite tempting players including Total and PTTEP to bid, Petronas abruptly cancelled the farm-out process and elected to go it alone — at least for the time being.

Kasawari was discovered in early 2012 and later that same year Petronas started the tender ball rolling for conceptual studies for what initially appeared to be the fast-track development of this sour gas prize.

Technip (now TechnipFMC) is understood to have carried out engineering studies that considered options including a standalone project or a tie-back to the combined NC3 and NC8 fields on the same block.

However, the tender deadline for the ultimately selected CPP was then pushed back and no contract was ever awarded before the latest oil price slump took its toll.

Petronas still seems keen to bring Kasawari on stream — the produced gas will be used as feedstock at its LNG Complex at Bintulu, Sarawak. Yet the operator does not seem to be in any immediate rush.

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Challenges remain for sour gas field project