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UPDATE 1-Shell and UAE's Mubadala swap Malaysian offshore field stakes

Sunday, 19 Jan 2014 | 5:19 AM ET

DUBAI, Jan 19 (Reuters) - Royal Dutch Shell and Mubadala Petroleum have swapped equity stakes in two exploration blocks off Malaysia, the companies said on Sunday.

Mubadala has taken a 20 percent interest in the Shell-operated deepwater Block 2B and Shell has taken a 20 percent interest in the Mubadala-operated Block SK320 in return.

"The equity swap agreement is an important step for Mubadala Petroleum's growth strategy in Malaysia and marks our first partnership in Southeast Asia with Shell, an important player in deepwater exploration," Maurizio La Noce, chief executive of Mubadala Petroleum, said in a statement.

Mubadala, owned by the Abu Dhabi government, said that drilling in Block SK320 had yielded two new gas discoveries, called Pegaga and Sintok.

"We need to do further work to determine the full extent and commerciality of those discoveries," La Noce said.

Anglo-Dutch energy giant Shell is the operator for 13 production sharing contracts (PSCs) in Malaysia and has stakes in five others. Output from these PSCs accounted for nearly half of Malaysia's total gas production in 2013, Shell said in a statement.

Mubadala was awarded its acreage in 2010 and the adjacent Block 2B was awarded to Shell in 2012.

State-run Malaysian oil and gas company Petronas is a participant in both blocks, which lie off the coast of the island of Borneo.