MALAYSIA'S national oil company Petronas has hit a stumbling block on its planned Kasawari gas development off Sarawak, East Malaysia for which it is evaluating bids for a key engineering, procurement, construction, installation and commissioning contract. Kasawari, located on Block SK 316, is said to be located in an envi- ronmentally-sensitive marine area and the project will not be able to proceed unless the Sarawak state government gives the green light. Industry sources said talks now under way between Malaysia's Prime Minister Mahathir Mohamad, the Attorney General, Petronas and the Sarawak state government regarding Sarawak's participation in oil and gas ventures in its territory will try to resolve the issue, which could see Kuala Lumpur offering some financial sweeteners to Sarawak. One source suggested that Sarawak could have played the "environmental card" as a way of trying to secure equity in Kasawari ahead of the field being developed. As it stands, exploiting Kasawari's estimated 3 trillion cubic feet of recoverable gas reserves would indirectly benefit Sarawak, which has stakes in trains at Petronas LNG Complex at Bintulu to which the gas will flow. However, the state is said to want more.
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