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Petronas Sounds Out Potential Buyers For $1B Gas Project Stake

Malaysia’s Petronas has approached around a dozen potential buyers offering $1 billion worth of a stake in a local gas project, Reuters reported on Monday, citing sources familiar with the private talks.

The companies that Petronas has talked to include ExxonMobil, Royal Dutch Shell, Thailand’s PTT Exploration and Production, and Japanese groups. The Malaysian state-held oil and gas company has started providing operational and financial data to the companies it had contacted and awaits bids over the coming weeks, according to Reuters’ sources.

Should Petronas manage to sell the stake, it would be the largest upstream asset stake sale for the Malaysian company since the oil prices started crashing two and a half years ago.

Back in February, Petronas was reportedly planning on selling a minority stake in an upstream gas project for $1 billion in order to raise capital and lower the government’s cost burden, according to two 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 development of the Kasawari field, which government estimates say could hold three trillion cubic feet of recoverable hydrocarbons.

The oil price slump has stymied gas profits, forcing Petronas to announce $11.2 billion in cuts in capital expenditures over the next four years, and more than 1,000 job cuts.

Related: Oil Prices Pull Higher On Outage In Libya’s Biggest Oil Field

In its 2016 results release, Petronas said it continued to maintain a conservative outlook for 2017 and expected prices to remain uncertain this year. The company vowed to continue to focus on its group-wide efforts to reduce costs and further improve efficiency and sustain “world-class operational efficiencies through collaborations within and outside the industry”.

By Tsvetana Paraskova for Oilprice.com

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