Petronas to Proceed with South China Sea Oil and Gas Exploration

Malaysia's Prime Minister Anwar Ibrahim on Tuesday reiterated that state energy firm Petronas will continue to conduct oil and gas exploration activities in Malaysia's exclusive economic zone (EEZ) in the South China Sea, despite objections from China.

This includes exploration activities in Petronas' Kasawari gas development off Sarawak state on Borneo, he told parliament.

"We will continue, but we will not close the door on discussions with any country," Anwar said.

He said Malaysia had territorial disputes with many of its neighbours, including Thailand, the Philippines, and Indonesia, and said undue focus was placed on its differences with China.

"We have issues but these issues do not affect diplomatic relations. These issues do not affect trade relations and close friendships with our neighbours," he said.

Anwar said last month Malaysia's exploration activities were within its territory and were not intended to be provocative or hostile towards China, following the media leak of a diplomatic note from Beijing.

In the note, carried by a Philippine news outlet, Beijing asserted that Malaysia's oil and gas exploration in the South China Sea breached its territory.

China claims sovereignty over almost the entire South China Sea and has deployed a fleet of coast guards deep into Southeast Asia, including the EEZs of Malaysia, Brunei, the Philippines and Vietnam, complicating those country's exploration efforts.

China rejects a 2016 ruling by the Permanent Court of Arbitration in the Hague that Beijing's expansive claims had no basis under international law.

Petronas's oil and gas projects in the South China Sea have had several encounters with Chinese vessels in recent years.

The Asia Maritime Transparency Initiative, a U.S. think tank, said in a report this month that Chinese coast guard vessels have made frequent visits to Malaysian exploratory wells off Sarawak this year, passing as close as 1,000 metres (0.6 mile) from gas production platforms at Timi, Kasawari, and Jerun.

Petronas' Kasawari field holds an estimated 10 trillion cubic feet of gas reserves and commenced first production in August this year.

(Reuters - Reporting by Danial Azhar and Ashley Tang; Writing by Rozanna Latiff; Editing by Jacqueline Wong and John Mair)

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