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* Petronas in talks to sell LNG as fuel for ships -upstream
* Sees significant LNG growth potential in South Asia
* Petronas oil price assumption at $45-$55 a barrel for 3-4
By A. Ananthalakshmi and Emily Chow
KUALA LUMPUR, May 8 Malaysian oil company
Petronas is looking to tap new markets to sell liquefied natural
gas, including as fuel for ships, the head of its upstream
operations told Reuters on Monday.
State-owned Petroliam Nasional Berhad, known as
Petronas, also sees significant growth potential for LNG in
India, Pakistan, Bangladesh and some parts of Southeast Asia,
its upstream CEO Mohd Anuar Taib said.
"The key for us in the LNG business is to figure out a way
to broaden and expand the customer base," Anuar said, adding
that lower prices have opened up new markets that had previously
been unable to afford LNG.
Asian spot LNG prices have dropped by more than 70 percent
since 2014, with production growing faster than demand. Spot
prices for June delivery stood at about $5.70 per million
British thermal units (mmBtu) on Friday, compared with $20-plus
Malaysia is the world's third-biggest LNG exporter behind
Qatar and Australia. The top destinations for its LNG are Japan,
South Korea and China, but Petronas is broadening its horizons
and the first cargo from its floating LNG facility was shipped
to India last month.
"We are making good inroads. We are working towards closing
sales supply agreements with some of the countries around the
region," Anuar said, adding that Petronas is also in preliminary
talks with partners over the sale of LNG as shipping fuel.
Anuar said that Petronas is working on an oil price
assumption of $45 to $55 a barrel for the next three to four
years. Brent crude was trading at about $48 on Monday.
"We tend to plan in a more prudent manner," he said, adding
that Petronas is not looking to increase capital expenditure.
Global upstream capex is expected to be about 30 billion ringgit
($6.92 billion) a year, he said. In 2015 upstream capex was 48.7
billion ringgit, according to its last available annual report.
"(That) is quite sufficient for us for maintaining our
production and also some growth," Anuar said of the capex
Like other oil majors, Petronas has taken a hit from lower
crude prices. Benchmark Brent crude prices have more than halved
Malaysia relies on its only Fortune 500 company for nearly a
third of its oil and gas-related revenue.
Though reduced operating expenses helped Petronas to post a
12 percent rise in full-year net profit in March, the company
gave a cautious outlook for 2017.
($1 = 4.3350 ringgit)
(Additional reporting by Florence Tan; Editing by David