SINGAPORE Feb 20 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
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
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
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)
(Reporting by Anshuman Daga; Additional reporting by Florence
Tan and Henning Gloystein in SINGAPORE and Praveen Menon in
KUALA LUMPUR; Editing by Muralikumar Anantharaman)