Kasawari project outlook seen improving
PETALING JAYA: The potential sale of equity in the Sarawakian oil field by Petroliam Nasional Bhd (Petronas) improves the outlook for the delayed Kasawari gas project, and thus, the long-term outlook for gas production and liquefied natural gas exports for Malaysia, said BMI Research.
The research house, which is a unit of Fitch Group, said the bulk of the funds generated from the stake sale in the SK316 offshore gas block is expected to be used to support further development phases at the Kasawari field.
The Kasawari gas project, which is part of SK316, is a deepwater, sour gas development estimated to hold about 3.2 trillion cubic feet of recoverable gas resources.
“Despite promising belowground prospects, development has progressed slowly due to the field’s deepwater, high-cost structure, and the relative inexperience of domestic engineering firms involving carbon dioxide removal.
“Potential integration of a foreign partner could dilute the project’s cost burden. Any future gas output from Kasawari will likely be designated for exports, given Malaysia’s comfortable surplus in gas,” the research house said in a statement.
Recently, wire news reports suggested that Petronas was looking to divest a large minority stake, up to 49%, in the Sarawak offshore gas field, and that the sale was partly driven by a need to raise cash at a time of low oil and gas prices.
However, Petronas president and chief executive Datuk Wan Zulkiflee Wan Ariffin told reporters on Tuesday that one of the criteria in looking for a partner was in finding one that was able to bring new technologies that made the extraction process more efficient, considering that the gas field contains high levels of carbon dioxide.
He said it was in the normal course of business to find a production sharing partner to “share the risks and rewards” of the project.
Wan Zulkiflee also said that Petronas’ financials were intact, despite suffering from lower earnings due to the oil price collapse.
The company has over RM130bil cash and among the lowest gearing levels among international oil companies at 17%.
The research house added yesterday that it expects plenty of interest for the stake sale, from the likes of Thailand’s PTT PCL and Indonesia’s Pertamina, as well as firms in South Korea and Japan.
According to a Reuters report, Thailand’s PTT PCL is already eyeing the stake.
Its chief executive Thewin Wongwanich was quoted as saying that it was interested in the deal, as it was an upstream business and its board had approved 199 billion baht (US$5.7bil) for investment over the next four years, especially in the petroleum business.