Petronas said the HoA involves its wholly owned subsidiary, Petronas Carigali Sdn Bhd (PCSB), and SMJ Sdn Bhd (SMJSB), a company wholly owned by the Sabah government.

In a statement, it said the HoA paves the way for SMJSB’s potential acquisition of a 50% participation interest in the Samarang production sharing contract (PSC).

The Samarang field is located about 50km off Sabah’s shore.

The agreement was signed by PCSB CEO Hasliza Othman and SMJSB CEO Dionysia Aloysius Kibat, witnessed by Petronas president and group CEO Tengku Taufik Aziz, Sabah chief minister Hajiji Noor and state finance minister Masidi Manjun.

Commenting on the agreement, Taufik said Petronas shared Sabah’s aspirations for mutual prosperity and the pursuit of sustainable development.

“Having SMJSB on board as our upstream business partner underscores Petronas’ efforts to build a more inclusive environment for the industry in Sabah, both offshore and onshore,” he said.

“SMJSB’s potential participation in the Samarang PSC also demonstrates Petronas’ continued commitment under the commercial collaboration agreement to develop and unlock the full potential of Sabah’s oil and gas industry.”

Petronas said the Samarang PSC is a producing asset encompassing key oil and gas hubs in Sabah, and is currently producing about 36,000 barrels of oil equivalent a day for both oil and gas.

The gas is delivered to customers in Kota Kinabalu and Labuan.

Earlier this year, Petronas Chemicals Group Bhd had signed a HoA to welcome SMJSB as a partner to Petronas Chemicals Fertiliser Sabah Sdn Bhd as part of its efforts to provide greater revenue sharing with the Sabah government-linked company.

On Feb 15, PCSB and E&P Malaysia Venture also signed a letter of understanding with SMJSB on the back-in option arrangement involving Block SB409 PSC, giving the Sabah government up to 20% participating interest upon completion of work commitment or commercial discovery, whichever is earlier.