Malaysia Brunei Agreement

Last week, we focused on this aspect of bilateral relations and there were reports of restrictions on existing projects within the common maritime border. The news, which was first broadcast exclusively by Energy Voice on 28 February and appeared in other industry publications, suggested that Malaysia had revoked a cross-border agreement with Brunei to jointly develop fields along the maritime border between Malaysia and Brunei. Brunei, 200 nautical miles, makes him a plaintiff in part of the South China Sea, which is the subject of multiple claims from China, Taiwan and Vietnam. Malaysia is also an applicant in the region, but a bilateral agreement with Brunei has resolved the overlaps on Brunei`s territorial waters. The two sides also signed a new agreement on a provisional agreement for the joint development of the Malaysian Gumusut/Kakap field and the Bruneis Geronggong/Jagus East field. The HOA defines the common parameters of field development on the basis of a preliminary production and cost-sharing agreement, until another agreement is reached on the status of the fields. The de facto boundary was along the basin between the Brunei River and Limbang River basins on the west side of the district and along the Pandaruan River on the east side. The border agreements have demarcated part of the western border[6] and the Pandaruan River,[5] while the other sections have not yet been demarcated. Earlier, at the end of 2017, Petronas and Brunei signed provisional unification agreements for the Kinabalu West NAG, Maharaja Lela North, Gumusut-Kakap and Geronggong-Jagus East fields. However, since Petronas claims to withdraw the agreements, these agreements appear to be under threat and Brunei will no longer receive its share of production if there are developments on the Malaysian side of the border. This should allow Kuala Lumpur to gain the upper hand in future negotiations. Of course, it is difficult to accurately assess the status of this issue and its future prospects on the basis of the weaknesses we know publicly. While the differences of opinion on the proposed sharing of revenues are not surprising in themselves, the key question is whether any differences can still be bridged.

Given the broader political shifts in Malaysia, which have led to a change of government with an uncertain future, it remains to be seen what the impact might be on aspects of bilateral relations, including in this regard. With regard to the delimitation of borders in general, the exchange of letters provided for the end of the dispute, Brunei having agreed to confirm the five historic agreements on borders. With regard to the sections not subject to these agreements, the two countries agreed to limit their common borders on the watershed principle. In addition, the two countries agreed to insist that their common border be demarcated and established by putting in place the necessary structures and procedures for this purpose.