Petroliam Nasional Bhd., Malaysia’s state energy company, said it made “major” oil and gas discoveries that may help replenish the Southeast Asian nation’s diminishing reserves.

Early estimates show a total 2.8 trillion cubic feet of natural gas and 100 million barrels of crude at two wells off the coast of Malaysia’s Sarawak state on Borneo Island, the Kuala Lumpur-based company said in a statement today.

“These discoveries are expected to further enhance exploration potential offshore Sarawak,” said Petroliam Nasional, known as Petronas. “In the next three years, over 50 exploration wells are expected to be drilled offshore Malaysia by Petronas and its production-sharing contractors.”

The nation’s crude and natural gas production has fallen for two straight years, declining to the equivalent of 1.63 million barrels of oil a day in the year ended March 31 from 1.66 million a day a year earlier, according to Petronas’s 2010 annual report. The country has responded by offering companies incentives to explore deeper and less-profitable fields in a bid to increase reserves as energy demand rises.

Petronas said it drilled to a depth of almost 4,000 meters (13,000 feet) below sea level at its NC3 well in Block SK316 off Sarawak, with early estimates showing 2.6 trillion cubic feet of gas in place. Production flow test results demonstrate that the field is “technically producible,” the company said, without commenting on its viability.

Tax Incentives 

The nearby Spaoh-1 well in Block SK306 shows “similar promise,” with preliminary estimates of 100 million barrels of oil and 2 billion cubic feet of gas, Petronas said. This was drilled to 3,000 meters and is being prepared for production testing, it said.

Prime Minister Najib Razak announced Nov. 30 several tax incentives to encourage the exploration of less-profitable oil fields, including a reduced income tax of 25 percent, from an earlier 38 percent. Southeast Asia’s second-largest oil and gas producer will also accelerate capital allowances and waive export duties on oil produced and exported from marginal fields to improve their viability, Najib said.

Malaysia has domestic crude oil reserves to last 24 years and natural gas for 38 years, the finance ministry said on Oct 15. Indonesia is the biggest oil and gas producer in Southeast Asia.

Malaysia had 84.1 trillion cubic feet of gas reserves at the end of 2009, the fourth-biggest in Asia, according to the BP Statistical Review. Its oil reserves stood at 5.5 billion barrels, the review said.

“These activities, especially if they result in discoveries, are expected to spur business opportunities in the oil and gas industry and will promote investment in the country,” Petronas said.

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