Petros’ new role likely to affect PETRONAS capex

UOBKH Research stated the paradigm shift in Sarawak is a key reason behind PETRONAS move to focus on its overseas projects in Canada and Argentina.

PETALING JAYA: Petroleum Sarawak Bhd (Petros) move to take over the role of sole gas aggregator of Sarawak’s natural gas trading business locally and overseas from Petroliam Nasional Bhd (PETRONAS) may have a significant effect on capital expenditure (capex) spending activity by the latter.

UOB Kay Hian (UOBKH) Research stated the paradigm shift in Sarawak is a key reason behind PETRONAS move to focus on its overseas projects in Canada and Argentina and why the national oil company’s domestic upstream capex may be relatively unexciting going forward.

“Recent developments alongside leadership changes suggest PETRONAS is going all out on its overseas ventures. The developments might have given rise to concerns on local capex cuts, especially on Sarawak projects,” it said.

Although things are “business as usual”, there has been a decline in business enquiries (for future local tenders), suggesting that activity is slowing,” the research house stated in its sector report.

State-owned Petros is taking over PETRONAS role as the sole gas aggregator for Sarawak’s natural gas trading business locally and overseas effective today, with a full transition by 2025, the report noted.

Petros had inked gas supply deals with Sarawak Energy Bhd and Sarawak Petchem Sdn Bhd for their power generation and methanol production facilities needs.

The state planned to use 30% of the natural gas produced from fields offshore for domestic use by 2030.

The research house said Sabah would soon follow Sarawak’s actions, with Sabah Maju Jaya negotiating to get more asset stakes back from PETRONAS.