Hibiscus Petroleum Bhd of Malaysia has given up on its plans to buy a 25 percent stake in the Kitan oil field, a project located in the joint area managed by Timor-Leste (East Timor) and Australia in the Timor Sea, the company said in a statement filed with the market regulator.

The original operation, valued at US$18 million, was to buy the stake held by Talisman Energy Inc in the oil field, located in the 01-105 area of the Joint Petroleum Development Area (JPDA).

In a notice to the regulator, Bursa Malaysia, Hibiscus said the decision was based on the fact that the necessary preconditions were not met by 31 May.

“Given the terms of the sale agreement, Timor Hibiscus issued a notice to the seller stating that the still unresolved preconditions had not been met,” Hibiscus said, referring to its subsidiary Timor Hibiscus, which would lead the operation.

The operation, launched in June 2014 provided for the purchase of 100 percent of the shares that Talisma Resources owns in the Kitan oil well, or 25 percent of the total project, which began production in 2011.

In March, Japan’s Inpex Corporation announced that it had reduced the value of the Kitan well by 7.5 billion yen (about US$62.6 million) following the fall in oil prices.

Located about 170 kilometres from Timor-Leste in the Timor Sea, the Kitan well is this year expected to generate revenues of about US$21.1 million for Timor-Leste.

The government expects 2015 to be the last year that the Kitan oil field will provide revenues to the state.

Discovered in 2008 and operated by Italy’s ENI, the Kitan field is expected to have minimum production of 37.1 million barrels of oil “throughout the project’s life time.” (macauhub/TL)