Petronas considers $1 billion sale of gas project

Petronas considers $1 billion sale of gas project

State-owned Malaysian oil and gas firm Petronas (PTG:MK) is mulling over the sale of a 49% stake, worth around US$1 billion, in its local SK316 offshore gas block in the state of Sarawak.

The potential divestment would be made as the company adapts to an over-saturated liquefied natural gas (LNG) market, as huge projects come online in the US and Australia, which has resulted in an almost 70% slump in Asian LNG prices.

The recent drop in LNG prices has also coincided with the back-end of a large slump in the global oil industry, which has further contributed to Petronas’ consideration of selling such a large stake in one of its strongest projects.

According to sources close to the matter, Petronas is working closely with an investment bank regarding the sale of the stake, and will look to prompt interest from nearby South East Asian firms, such as Indonesia’s Pertamina and Thailand’s PTT Exploration.

If a buyer is attracted, funds from the deal may contribute towards the development of the Kasawari gas field, which has an estimated recoverable hydrocarbon resource of about three trillion standard cubic feet.