Limbang, Blocks L and M: Tell us the real deal

More questions have been raised on the reported surrender of Blocks L and M to Brunei during the Abdullah Badawi administration.

Source: rigzone.com

Blocks L and M, not far from the Sabah coast, are reportedly referred to in Brunei as Blocks J and K or there is some kind of overlap in the Exclusive Economic Zone. This Block J alone is projected to produce more than 150,000 to 200,000 barrels per day, which could double Brunei’s oil production.

Essentially, Brunei appears to have awarded the two blocks to Total and Shell prospectors while Malaysia awarded the same or overlapping blocks to Petronas Carigali and Murphy Oil. Murphy held a 60 per cent stake in Block L and a 70 per cent stake in Block M.

The two blocks, about 1.5 million acres each with water depths of 2,700-9,300 feet, lie next to the oil-rich 4 million acre-Block K, which was awarded in 1999 to Murphy (80 per cent) and Petronas Carigali. Murphy had reported that drilling in the Kikeh oil field in the southern part of Block K had yielded a “very significant oil discovery”. One report said it could reach 125,000 barrels per day.

Source: thestar.com.my

According to Mahathir, in return for surrendering the two blocks (Blocks L and M), Abdullah negotiated with the Sultan of Brunei to get back Limbang – though Limbang was reportedly not mentioned by name in the letters of exchange: “No Petronas representatives were present, only foreign office staff and the foreign affairs adviser to the PM,” writes Mahathir. (Ironically, the Far Eastern Economic Review was sued in 1987 during the Mahathir administration for suggesting that there could be a “possible sale” of Limbang to Brunei.)

He adds in a blog post sarcastically titled ‘Malaysia’s generosity’:

As we all know Abdullah triumphantly announced that he had settled the Limbang claim with Brunei (here). No mention was made of the two blocks. Brunei disclaimed (here) that they had agreed to give up Limbang. The foreign office and Abdullah did not rebut Brunei’s statement. Now it is made clear that the two blocks are no longer a part of Malaysia.

Mahathir alleges Abdullah has caused Malaysia to lose at least US$100 billion dollars (about RM320 billion) of Malaysia’s oil in this agreement. “Can Wisma Putra please explain why it did not stop Abdullah.”

The exchange of letters between Malaysia and Brunei reportedly took place on 16 March 2009 – that is, 18 days before Abdullah stepped down as premier to make way for Najib.

The other big question is, why was Parliament kept in the dark about this whole affair. (Check out the confusion over  Limbang which I blogged about in March 2009.) Can you really go and negotiate a territorial dispute without the matter first being debated thoroughly in Parliament? This is what happens when the Executive thinks it is superior to Parliament and keeps it in the dark.

An independent inquiry needs to get to the bottom of this. Abdullah himself has to clarify exactly what the terms of the deal were. Not only that, the following also could shed more light on what happened: Petronas, Wisma Putra, the Brunei embassy and Murphy Oil.