Petroleum Sarawak Exploration & Production Sdn. Bhd. (“PSEP“) and Sarawak Shell Berhad (“SSB”), both subsidiaries of Shell plc, have reached an agreement for SSB to sell its interest in two offshore production sharing contracts (PSC) in the Baram Delta. Both the Amended 2011 Baram Delta EOR Production Sharing Contract (“BDO PSC”) and the SK 307 Production Sharing Contract (“SK307 PSC”), which each include non-operated interests of 40% and 50%, respectively, are up for sale. The remaining interests in both PSCs are held by the operator, PETRONAS Carigali Sdn. Bhd. (“PCSB”).

The deal has a $475 million base consideration, and extra payments of up to $50 million could be made between 2023 and 2024, depending on commodities prices. With a projected completion date of early 2023, the deal will go into effect on January 1, 2023, pending the fulfilment of certain conditions, including, among others, obtaining regulatory approval from PETRONAS and PCSB.

“This decision is in line with our work to continue focusing our portfolio”, said Zoe Yujnovich, Shell’s Upstream Director. “Malaysia remains one of our eight core Upstream positions worldwide and we will continue to help power the country’s progress by investing in the oil and gas needed today, as well as in the transition to a low-carbon energy system.”

Shell continues to have a significant presence in Malaysia’s upstream, downstream, gas-to-liquids, and business services industries. Shell declared its intended to sell its stakes in the BDO PSC and SK307 PSC in March 2021.