Production Sharing Contract (Psc) in Malaysia

Production Sharing Contract (PSC) in Malaysia: An Overview

Production sharing contracts (PSC) have become a popular method of exploring and producing oil and gas in Malaysia. The PSCs are contracts between the government and oil and gas companies, which give them the right to explore and produce oil and gas in a specified area for a certain period.

In Malaysia, the national oil and gas company Petronas is responsible for awarding PSCs to oil and gas companies. The PSCs are awarded for specific blocks of acreage within Malaysia’s territorial waters. The PSCs are structured to ensure that Petronas and the Malaysian government receive a share of the revenue generated from the oil and gas production.

The PSCs in Malaysia typically have a duration of 25-30 years, with the option to renew. The PSCs also typically have a production-sharing formula that determines the amount of oil and gas production that the oil and gas companies can keep and the amount that Petronas and the government will receive.

The PSCs have several different components, including exploration, development, and production. During the exploration phase, the oil and gas companies are responsible for conducting seismic surveys, drilling exploration wells, and evaluating the potential of the block. The development phase involves the construction of production facilities, drilling development wells, and preparing for the production of oil and gas. Finally, the production phase involves the actual production of oil and gas, with the oil and gas companies responsible for the ongoing maintenance and operation of the production facilities.

The PSCs in Malaysia have been successful in attracting foreign investment in the oil and gas industry, with over 40 foreign oil and gas companies currently operating in Malaysia. The PSCs have also been successful in generating significant revenue for Petronas and the Malaysian government.

However, there are also some challenges associated with PSCs in Malaysia, including the need to balance the interests of Petronas, the government, and the oil and gas companies, as well as the need to ensure that the PSCs are structured in a way that maximizes the benefits for Malaysia.

Overall, the PSCs in Malaysia have been a successful model for oil and gas exploration and production, providing significant benefits to both the oil and gas companies and the Malaysian government. As Malaysia continues to develop its oil and gas industry, it is likely that PSCs will continue to play a key role in the country’s energy sector.