Petronas asset sale moves into round two

SINGAPORE/HONG KONG: The sale by Malaysian energy firm Petronas of an estimated US$1 billion (RM4.3 billion) stake in a local upstream gas project has moved to the second round and is set to attract interest from about half a dozen bidders including Royal Dutch Shell and ExxonMobil Corp, four sources familiar with the matter said.

State-owned Petroliam Nasional Bhd (Petronas) had kicked off a process to sell a stake of up to 49% in the SK316 offshore gas block in Sarawak, Reuters reported in February.

Prospective buyers are expected to submit second round financial bids this month, and a final decision on the successful bidder is expected later this year, said two sources.

Sources said Total, PTT Exploration and Production PCL and some Japanese firms are also among those keen to bid for the asset.

The transaction, if completed, would mark Petronas’ biggest upstream stake sale since oil prices started falling more than two years ago.

All the sources declined to be identified as discussions between Petronas and the companies are private, adding that terms of the deal could change depending on how the talks proceed.

Petronas, which last week maintained a cautious outlook for the rest of the year after reporting quarterly profit more than doubled a year ago, did not respond to a request for comment.

In a statement to Reuters in April, it had said that through its unit, Petronas Carigali, it was seeking partners who could bring technology and capabilities to explore, develop and efficiently operate the various fields and opportunities in the SK316 offshore gas block.

Shell, ExxonMobil and Total declined to comment.

PTT Exploration said it was keen to invest in Thailand and Southeast Asia due to its expertise in these markets and as costs and risks were low.

“This area is consistent with the company’s expansion strategy, however, the company will consider details of each project before making an investment decision,” PTTEP said in response to a query on its interest in the Petronas asset.

Gas from the NC3 field in the SK316 block feeds Malaysia’s LNG export project, known as LNG 9, a joint venture between Petronas and JX Nippon Oil & Energy Corp that began commercial production in January.

The sale of a stake in the offshore gas block has been clouded by political opposition to the process, but sources said this was unlikely to derail ongoing talks.

Opposition party leaders in Sarawak, a key vote base for Malaysian Prime Minister Datuk Seri Najib Abdul Razak who is likely to call general elections this year, have expressed disapproval in Petronas’ plan to find a partner.

One even called for the state to be given the option to acquire all or part of the stake that it proposes to sell.

Sarawak Chief Minister Datuk Amar Abang Johari, however, has said the state did not want to take on the risk of developing the gas field as “the project cost billions of ringgit and it is of high risk,” according to Bernama.

He said the state government was in talks with Petronas about the partner-finding process for SK316. – Reuters