Malaysia's Petronas in talks to develop oil blocks in Brunei

Malaysia's national oil firm Petronas said on Saturday it is in talks with Brunei to jointly develop two oil areas off Borneo after the neighbours settled a border dispute, reported AFP.

The two sides have been locked in a row over the potentially oil-and-gas rich blocks since 2003, which had held up exploration. Petronas said the two countries agreed in March last year that the disputed areas "are no longer part of Malaysia" but allowed the state-owned firm to enter into new production sharing contracts in a bid to end the spat.

"Petronas was invited by Brunei to enter an agreement to develop Blocks CA1 and CA2 on a commercial arrangement basis," the company said in a statement. "Petronas has set up a team that has begun negotiations with Brunei to work out the terms for this commercial arrangement.

Both parties are committed to arriving at a mutually beneficial arrangement as soon as possible," it added. Brunei, a tiny monarchy surrounded by Malaysia's eastern states of Sarawak and Sabah, awarded exploration rights in one offshore block to French oil firm Total and another to the Royal Dutch Shell Group.

But Malaysia's state-owned Petronas awarded identical acreage to US firm Murphy Oil and its own subsidiary, Petronas Carigali. Petronas' statement comes after ex-Malaysian premier Mahathir Mohamad this week said the deal with Brunei cost Malaysia at least 100 billion dollars in oil revenues from estimated reserves of almost a billion barrels of oil.

His successor Abdullah Ahmad Badawi, who was premier when the deal with Brunei was inked reportedly clarified later that Malaysia would be allowed to participate in developing the two blocks on a commercial basis for 40 years.

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