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Background |
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Oil
was discovered in Malaysia more than a century ago, starting
from a small production of 83 barrels per day. Now the
petroleum industry in Malaysia has grown into a multi-billion
dollar business with oil production of 594,900 barrels
per day in 2000 while gas is being produced at 5.5 bscf
per day. |
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Prior
to 1976, oil companies in Malaysia operated under a concession
system. PETRONAS was formed as a result of the Petroleum
Development Act (PDA) in 1974, and took over as the sole
custodian of all petroleum resources in Malaysia. Production
Sharing Contract (PSC) terms were introduced in 1976.
In 1985, new PSC Terms were introduced primarily to attract
more foreign investments to explore for oil and gas resources.
The 1985 PSC terms offered a better profit split for the
contractor. With the push towards deepwater exploration,
PETRONAS introduced a Deepwater PSC in 1992 specifically
designed to accelerate exploration in deeper waters (beyond
200 m). In 1997, a more liberal petroleum arrangement
was introduced. The 1997 R/C PSC is a self-adjusting formula
of cumulative revenue/cumulative cost designed to provide
incentives to develop smaller oil and gas discoveries.
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