Petronas not selling minority stake in SK316

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This article first appeared in The Edge Financial Daily, on February 22, 2017.


KUALA LUMPUR: Petroliam Nasional Bhd’s (Petronas) president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin has dismissed claims that the national oil company was looking to sell its 49% stake in the SK316 gas block off the coast of Sarawak as it was cash-strapped as a result of the slump in crude prices.

News reports earlier had it that Petronas was looking to raise as much as US$1 billion (RM4.46 billion) from the minority stake sale.

“All I can say is, please look at our balance sheet. Our gearing at 17% is one of the lowest if not the lowest among our peers. So we are not cash-strapped,” he said at the media luncheon meeting yesterday.

Petronas is due to announce its fourth-quarter results in mid-March. For its cumulative nine months ended Sept 30, 2016, Petronas registered after-tax profits of RM12.25 billion on revenue of RM146.31 billion. Operating cash flow stood at RM36.13 billion as at end-September.

Wan Zulkiflee, however, clarified that Petronas could be on the lookout for a technical partner to help as the Kasawari Field had high levels of carbon dioxide (CO2). The field is located in Block SK316 within the Central Luconia Province approximately 200km north of Bintulu, Sarawak.

“What we may look for is companies with high technology as the gas [at Kasawari] has about 30% to 40% CO2 content, but we are always looking at many things,” he said.

Research reports have it that Kasawari has over three trillion cubic feet of gas in reserves, with first gas slated for early 2019. Production meanwhile is projected to be between 500 million cubic feet per day (mmcfd) and 750 mmcfd of gas.

The infrastructure for SK316 will include a 30,000-tonne central processing platform (CPP) with topsides weighing about 19,000 tonnes, a wellhead platform, a bridge, flare tower and a central collection platform weighing more than 7,000 tonnes.

Due to the high levels of CO2, a key component is the CPP topside module that contains a CO2 or acid gas removal unit.