Malaysia, Brunei draft plan to end oil row-sources

KUALA LUMPUR/BANDAR SERI BEGAWAN, Aug 13 (Reuters) Malaysia and Brunei have reached a tentative deal to end a maritime border dispute that has halted oil exploration off Borneo island for four years, sources in both countries said today.

A joint proposal to resolve the boundary issue is expected to be publicly endorsed by the leaders of both countries tomorrow, and could lead to the resumption of oil exploration in the area, which is close to a major recent oil discovery, the sources said.

''It might resolve (the oil dispute),'' a Malaysian source familiar with the proposal said. The source added that the proposal dealt with the sovereign boundary and that the next step would be to sort through the overlapping oil claims.

A source in Brunei confirmed the proposal was backed by both sides but also declined to give details. Malaysian Prime Minister Abdullah Ahmad Badawi and Brunei's sultan, Hassanal Bolkiah, met for annual bilateral talks in the Brunei capital today. The talks are due to end tomorrow morning.

The dispute erupted in 2003 when Malaysia and Brunei awarded production-sharing contracts to four overlapping deepwater exploration blocks in the South China Sea, close to where a 440-million-barrel discovery had been made the year before.

Malaysian state oil firm Petronas awarded its two blocks to US oil firm Murphy Oil while Brunei awarded one of its blocks to France's Total , BHP-Billiton and Hess Corp and the other to Shell , Mitsubishi and ConocoPhillips .

A spokesman for Malaysia's foreign ministry gave no immediate comment and said a joint statement on the outcome of the leaders' talks would be issued tomorrow.

Officials from Brunei's Petroleum Unit and its information ministry could not be immediately reached for comment.

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