Petronas to Sign With India Buyer March 7 for Canada Gas Stake

Petroliam Nasional Bhd., Malaysia’s state oil company, will sign an agreement to sell 10 percent of its liquefied natural gas project in Canada to an Indian company on March 7, its chief executive officer said.

Petronas, as the company is known, may also sell 15 percent stake in the Pacific NorthWest LNG project to an Asian buyer by the end of this month, CEO Shamsul Azhar Abbas told reporters in Kuala Lumpur today, after the company reported a 58 percent increase in fourth-quarter profit. It is allocating an additional two percent to Brunei National Petroleum Co., which already owns three percent.

“We have more or less concluded it with the Indian company,” Shamsul said, without naming the buyer. “That’s a done deal.”

Petronas acquired control of the project through its C$5.2 billion ($4.7 billion) takeover of Canada’s Progress Energy Resources Corp. in 2012, making it the second-biggest shareholder in British Columbia’s Montney shale-gas area. The Kuala Lumpur-based company aims to reduce its share in Pacific NorthWest LNG, which runs a gas export facility, to as low as 50 percent by selling stakes to Asian gas buyers, the unit’s President Greg Kist said in November.

Indian Oil Corp., the nation’s biggest refiner, has lined up a $900 million one-year bridge loan to fund a planned purchase of a stake in Petronas’s Canadian gas projects, three people familiar with the matter said last month.

Japan Petroleum Exploration Co. bought a 10 percent stake in the project last year. The Canadian asset will produce as much as 19.68 million metric tons of LNG a year for 25 years starting in 2018, according to an application to the country’s National Energy Board.

Portfolio Review

Petronas, which plans to spend a record 300 billion ringgit ($91 billion) to replenish Malaysia’s diminishing reserves, has embarked on a worldwide review of its portfolio since Shamsul took over four years ago. It exited projects in countries including Ethiopia, East Timor and Pakistan, while acquiring oil and gas blocks in Canada, Australia and Brunei.

The company is seeking to sell stakes in exploration and production projects in Vietnam, three people with knowledge of the matter said Feb. 26, asking not to be identified because of the information is private. The sale may be at least $300 million, one of the people said.

Petronas signed a memorandum of understanding with Argentina’s state-controlled YPF SA last month to jointly develop a 187 square-kilometer (72 square miles) area in Vaca Muerta for shale oil. The Argentine producer is seeking shale partners to develop Vaca Muerta, an area the size of Belgium that contains at least 23 billion barrels of oil, drawing companies including Chevron Corp.

Fourth Quarter

Net income at the Malaysian explorer climbed to 9.58 billion ringgit in the three months through December from a restated 6.06 billion ringgit a year earlier, according to a statement released today in Kuala Lumpur.

Revenue rose 10 percent to 84.8 billion ringgit, driven by higher output of crude oil and processed gas sales volume, coupled with higher realized LNG prices and favorable dollar exchange rate movement against the ringgit.

Oil in New York trading averaged $97.61 a barrel during the three-month period, compared with $88.23 a year earlier, according to data compiled by Bloomberg. Total production rose to 2.21 million barrels a day of oil equivalent in the fourth quarter from 2.08 million last year, Petronas said.

Petronas will make a final decision on whether to proceed with a $20 billion refining and petrochemicals project in Pengerang in Malaysia’s southern Johor state bordering Singapore at the end of this month, Shamsul said. The company may not proceed with the plan if the costs and returns prove unfavorable, Shamsul said Aug. 26.

Taiwan’s Kuokuang Petrochemical Technology Co. scrapped its plan to build an integrated refining and petrochemical complex in the same area because the project is no longer competitive, shareholder CPC Corp. said Dec. 5. Thailand’s PTT Global Chemical Pcl canceled a plan to jointly spend on a petrochemical project with Petronas after a study showed chances of low returns, Reuters reported on Feb. 21, citing PTT CEO Bowon Vongsinudom.

To contact the reporter on this story: Chong Pooi Koon in Kuala Lumpur at pchong17@bloomberg.net

To contact the editor responsible for this story: Barry Porter at bporter10@bloomberg.net

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