Shell in second Malaysian gas find

Royal Dutch Shell announced on Thursday that it had made a gas discovery at the deepwater Rosmari-1 exploration well in Block SK318, offshore Sarawak, Malaysia.

The Rosmari-1 well, located 84 miles (135 kilometres) and drilled to a total depth of 6,965 feet (2,123 metres), encountered more than 1,476 feet of gas column.

More exploration drilling is planned, with the discovery a good sign of the gas potential in a region of strategic interest for the oil major.

"Rosmari-1 is a testament to our ability to successfully drill and build understanding of new geology within our existing exploration heartlands, adding value to our existing assets in Malaysia. We are expanding and rejuvenating heartlands across our exploration portfolio, including in Brunei, Australia and the Gulf of Mexico," Andy Brown, director at Shell Upstream International said in a statement.

Shell operates Block SK318 with an 85% interest, with Petronas Carigali Sdn Bhd, the upstream subsidiary of Malaysia's national oil company Petroliam Nasional Berhad, owning the remainder.

Last week Shell and Malaysia's national oil and gas company Petronas found oil offshore Sabah, Malaysia, via the Limbayong-2 well, and further appraisal work is planned to determine its recoverable volume.

The drilling of the Limbayong-2 appraisal well was carried out by the consortium of Shell Malaysia (35%), ConocoPhillips (35%) and Petronas Carigali Sdn Bhd (30%).

The company has been restructuring its two worst-performing businesses, downstream and North American shale, by selling underperforming assets, and instead refocusing on higher value opportunities.

It recently postponed Ormen Lange, a major offshore natural gas project in Norway, owing to rising costs and lack of clarity over the project’s potential.

Like most oil majors, Shell has pledged to cut capital spending and focus on delivering better returns for shareholders.

Analysts say Shell should be able to improve its return on capital employed which has been relatively poor, at under 15%.

The news barely moved the shares which were up 0.06% to 2,386p in early trading.