The latest oil discovery off eastern Sabah could be Malaysia's largest deepwater find and is likely to substantially boost the fortunes of Southeast Asia's second top oil producer, a report said today.

Shell Malaysia and its partners, Petronas Carigali and ConocoPhilips, announced late yesterday they had made an important oil discovery in the Gumusut-1 exploration well in Block J northwest of Sabah on Borneo island.

This was the second significant discovery of oil deposits in six months in Malaysian waters and was likely to sharply increase Malaysia's oil reserves, the New Straits Times said. Malaysia is the second largest oil producer in the region after Indonesia.

In September last year, US-based Murphy Oil Corp announced new oil discoveries in Malaysia's first deepwater well off Sabah equivalent to 22 percent of Malaysia's current oil reserves of some 4.5 billion barrels, the daily said.

Early days

While the exact amount of the Shell struck in Gumusut has yet to be determined, indications are that it is the largest find of crude in the area and is of high quality, it said.

"These are still early days for Gumusut but this discovery is a key achievement," said Shell Malaysia chairman Jon Chadwick.

"The priorities are now to appraise the discovery and develop the field in a timely manner."

Shell Malaysia has a 40 percent stake in the joint-venture, ConocoPhilips 40 percent and Petronas Carigali the remaining 20 percent. Shell is also involved in four other offshore fields in Sabah and has some 17 production sharing contracts with Petronas to explore oil and gas in waters off Terengganu, Sabah and Sarawak states. - AFP