Petronas considers $1 bln stake sale in offshore gas project


SINGAPORE: Malaysian state-owned oil and gas firm Petronas is aiming to sell a large minority stake in a prized upstream local gas project for up to $1 billion as it seeks to raise cash and cut development costs, two sources familiar with the matter said.

Petroliam Nasional Bhd (Petronas) is looking to sell a stake of as much as 49 percent in the SK316 offshore gas block in Malaysia's Sarawak state, the sources told Reuters, a move that would be one of its first major recent sales as it grapples with oil prices that have slumped by half from two-and-a-half years ago.

Petronas is working with an investment bank on the stake sale and kicked off the process this month, one of the sources said. Petronas did not respond to a request for comment.

Gas from the NC3 field in the SK316 block feeds Malaysia's liquefied natural gas (LNG) export project, known as LNG 9, Petronas' joint venture with JX Nippon Oil & Energy Corp that started commercial production in January.

The sources said the stake is expected to include a combination of the producing NC3 gas field, the potential development of the Kasawari field in the same block and other exploration acreage in the block.

The funds raised could contribute to the future development of the Kasawari field, one of the largest non-associated gas fields in Malaysia, which has an estimated recoverable hydrocarbon resource of about three trillion standard cubic feet.

The stake could appeal to firms such as Indonesia's state-owned Pertamina, Thailand's PTT Exploration, and Production PCL and some Japanese companies, the sources said.

As huge production comes online in Australia and the United States, LNG markets are oversupplied, resulting in an almost 70 percent slump in the Asian spot LNG price <LNG-AS> since 2014 to $6.40 per million British thermal units now.

Despite this, Malaysia's LNG assets are viewed as attractive thanks to comparatively low production costs and due to their proximity to North Asia's big consumption hubs of Japan, China, and South Korea.

Petronas is currently gauging interest from potential bidders, said the sources, who declined to be identified as they were not authorised to speak about the matter.

A slump in oil markets since 2014, which has seen crude prices halve to little more than $50 per barrel, has squeezed Petronas' cashflow and forced it to announce a 50 billion Malaysian ringgit ($11.2 billion) cut in capital expenditure in January 2016 over four years. ($1 = 4.4560 ringgit) - Reuters

Consolidation in oil industry not happening fast enough

KUALA LUMPUR: There still needs to be more consolidation in the oil and gas (O&G) industry, according to Petroliam Nasional Bhd (Petronas) president and chief executive Datuk Wan Zulkiflee Wan Ariffin.

Using the example of O&G fabrication yards in Malaysia, he explained that while there were eight such yards in Malaysia, Petronas’ requirements for the next few years would only be sufficient to cater to the optimum utilisation of two to three fabrication yards.

“We are not in a position to help all eight because we simply do not have work to give. The requirements have scaled down due to the low oil price environment,” he told a briefing to senior editors here yesterday.

Petronas, he said, was playing its part by being transparent with industry players and associations about the oil giant’s plans for the next few years. This is for the industry to be best informed on the type of capacity that Petronas needs.

“We did not do this before. But now, we engage and inform the industry on what we require. We will tell them how many platforms, rigs and other services we will be needing,” he said, adding: “We hope this gives the industry a sense of reality.”

There are about 3,700 O&G companies that are registered with Petronas. Norway, which has similar-sized O&G deposits as Malaysia, has just around 700 players in this sector.

Wan Zulkiflee said that it would appear that the industry would take some time before consolidation hits and the industry reduces its size to that similar to Norway.

Even before the downturn in the oil prices started in June 2014, Petronas had advocated to industry players to scale down and consolidate. Towards this end, the national oil company told the industry players to consolidate in order to create larger more competitive players.

Among the listed companies, there have only been three notable consolidation exercises in the O&G industry. The first was the merger between Kencana Petroleum Bhd and SapuraCrest Petroleum Bhd in 2012. The merger took place at the right time when oil prices were still high.

The other exercise was last year’s takeover of Perdana Petroleum Bhd by Dayang Enterprise Holdings Bhd.

More recently was the merger between UMW Oil and Gas Corp Bhd, Icon Offshore Bhd and Orkim Sdn Bhd to create an integrated O&G services provider.

Wan Zulkiflee pointed out that among the 3,700 were agents who did not invest in O&G assets and were reaping handsome profits.

“Imagine a commission of just 1% for the kind of contracts that we award. It runs into a big sum for the agents. We want to only help those who have invested in their assets and grown their expertise,” he said.

Hi all the experienced sifus here, just want to ask opinion in switching career path from construction to tank cleaning service. Recently I just got an offer as Project Engineer for tank cleaning work. What is the career growth in this service? Appreciate if you guys can share some thoughts on it. Thanks alot. My past experience was in plant construction.

KUALA LUMPUR: The Saudi Arabian Oil Company (Saudi Aramco) had on Tuesday sealed an agreement with Petroliam Nasional Bhd's (Petronas) to acquire a stake in the latter's multi-billion ringgit Refinery and Petrochemicals Integrated Development (RAPID) project in Johor.
The signing of the share purchase agreement for Saudi Aramco's equity participation in the RAPID project will see both partners holding equal ownership in selected ventures and assets of the RAPID project within the Pengerang Integrated Complex (PIC).

In a joint statement, they said this partnership marks the beginning of a strategic, mutually beneficial relationship providing RAPID with high-impact strengths and synergies from both Saudi Armaco and Petronas.

“Under the partnership, Saudi Aramco will supply up to 70% of the crude feedstock requirements of the refinery, with natural gas, power and other utilities supplied by Petronas,” the statement said.
The agreement was witnessed by the Custodian of the Two Holy Mosques King Salman Bin Abdulaziz Al Saud and Prime Minister Datuk Seri Najib Tun Abdul Razak.

Read more at http://www.thestar.com.my/business/busines...hWLLtKEhYjOs.99