Uzma JV terminates marginal oil field contract after hitting 'economic cut-off'

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KUALA LUMPUR (May 22): Uzma Bhd’s joint venture (JV) has terminated its Tanjong Baram small field risk service contract (RSC) at the Tanjong Baram marginal oil field with Petroliam Nasional Bhd (Petronas) as it has reached the “economic cut-off” under the contract.

In a statement, the group said that its wholly-owned Uzma Ventures (Sarawak) Sdn Bhd and EQ Petroleum Developments Malaysia Sdn Bhd (EnQuest) have terminated the contract, and such the national oil firm will reimburse the balance of the reimbursable capital and operational expenditures to Uzma and EnQuest over nine months.

Petronas awarded the contract to the JV, in which EnQuest holds a 70% stake and Uzma 30%, to develop the Tanjong Baram field located 6km off Sarawak in 2014, when oil prices were averaging US$90 a barrel.

The Tanjong Baram field’s first struck oil in August 2015.

“Together with our partner, EnQuest, we have managed to operate the facilities safely since 2014. Through the implementation of innovative technologies and cost-effective operations, we were able to sustain the production of this small field for four years despite the low oil price.

“We appreciate Petronas for giving us the opportunity to demonstrate our capabilities throughout the contract,” said Uzma Managing Director and Group CEO Datuk Kamarul Redzuan Muhamed.

The termination will not have any significant impact on its earnings and net assets for the financial year ending June 30, 2020 (FY20).

Uzma shares finished 2.4% or 1.5 sen lower at 61 sen, valuing it at RM195.22 million.