Malaysia’s Petronas plans to sell a minority stake in an upstream gas project for a $1 billion sum to raise capital and lower the government’s cost burden, according to two anonymous sources who spoke to Reuters.
The stake – which could encompass up to 49 percent of the venture – would come from the SK316 offshore gas block in the island nation’s Sarawak state. A portion of the funds earned from the new sale could be set aside for the future of the Kasawari field, which government estimates say could hold three trillion cubic feet of recoverable hydrocarbons.
The 2.5-year oil price slump has stymied gas profits, forcing Petronas to announce US$11.2 billion in cuts in capital expenditures over the next four years, and over 1,000 job cuts. The company’s dividend payouts have also been cut.
In September, Reuters had reported that the firm – which accounts for a third of Malaysia’s oil and gas revenues – planned to sell a majority stake in a liquefied natural gas (LNG) plant in Canada. Since then, Petronas has denied any such intentions.
The anonymous sources who commented on the SK316 sale said the government had been considering offers from a range of bidders after the process began earlier in February.
More than half of the $4 billion necessary to fully develop SK316 remains to be spent, Prasanth Kakaraparthi, an upstream research analyst for Wood Mackenzie, said.
“Given that the second phase of development will involve a significant amount of capital commitment, it’s not completely out of the question to think that they might want to bring in some partners to sort of share some of that burden,” he added.
Reuter’s source named Pertamina, PTT Exploration and Production, and Kuwait Foreign Petroleum Exploration Company as possible interested parties.
By Zainab Calcuttawala for Oilprice.com
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