‘FIRE SALES’ AT PETRONAS TO RAISE CASH FOR NAJIB REGIME? OIL MAJORS EYE STAKE IN OFFSHORE SARAWAK GAS FIELD

PETALING JAYA – Petroliam Nasional Bhd’s (Petronas) proposed sale of a stake in a gas field offshore Sarawak has attracted the attention of several oil majors, with bids expected in the next few weeks.

The sale of a 49% stake in the SK316 gas block is estimated at US$1bil and it has caught the interest of some of the biggest oil and gas (O&G) companies in the world due to the potential cyclical upturn in oil prices.

Industry officials said that the strong interest was on the basis of the reserve size of the block – said to be one of the largest in the region.

The Kasawari field was among the two major gas discoveries made by Petronas in Block SK316 in 2012. According to previous estimates by Petronas, the recoverable hydrocarbon resource for the field is just over three trillion standard cubic feet.

Should it go through, the stake sale would mark the oil giant’s second major billion-dollar deal this year.

It had in principle secured a US$7bil commitment from Saudi Aramco in February to invest in its Refinery and Petrochemical Integrated Development (Rapid) project in Pengerang, Johor. Details are expected to be firmed up this year.

According to Reuters, Petronas has pitched the stake to potential bidders which included Royal Dutch Shell, ExxonMobil Corp, Thailand’s PTT Exploration and Production (PTTEP) as well as Japanese firms, citing sources.

If successful, the deal could mark Petronas’ biggest upstream stake sale since oil prices started declining more than two years ago. Petronas is targeting to lower operating expenses, cut jobs and roll back projects to help it navigate through the low oil price environment.

The state-owned O&G company has approached about a dozen prospective buyers including global oil majors and Asian firms focusing on South-East Asia, said the sources who declined to be identified as the talks are private.

They said Petronas has begun providing financial and operational data to the companies.

Citing sources, Reuters reported in February that Petronas was considering selling a stake of as much as 49% in the SK316 offshore gas block in Sarawak.

In a statement to Reuters, Petronas said that through its subsidiary, Petronas Carigali Sdn Bhd, it is looking for partners who can bring the technology and capabilities to explore, develop and efficiently operate the various fields and opportunities in the offshore gas block.

“We are confident that we will attract the right partners to maximise the potential value of these opportunities to help meet the world’s growing O&G demand,” Petronas said.

It was not immediately known what the individual companies’ responses to Petronas’ approach were.

ExxonMobil declined to comment, while Shell referred the query to Petronas. A spokeswoman for PTTEP declined to comment on the deal, but said the company was keen to invest in South-East Asia because it had expertise in the region, where cost and risks were low.

Like most oil majors, Petronas has been on a cost-cutting spree to match its operating expenditure and cost to the lower average cost of crude oil. Apart from cost cutting, it has been focusing on conserving cash flows to meet its capital commitments.

Among the large capital commitments is an estimated sum of RM60bil for the Rapid project. Petronas has always maintained that it was open to having joint-venture partners for its capital-intensive projects. However, the partners have to come on the terms set by the national oil company.

The same terms are expected to be set in selecting the partner for the SK316 O&G field.

– ANN