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Wednesday July 16, 2008

Petronas to focus on overseas ops

By JOSEPH CHIN


KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) will focus more on international operations as national reserves continue to mature and decline, says president and chief executive officer Tan Sri Mohd Hassan Marican.

He said revenue from international operations increased in the financial year ended March 31 (FY08) by 33.1% to RM90bil.

This makes it the biggest contributor to group revenue for the first time, which reflected the group’s move to derive higher returns from global investments.

”The RM90bil represented 40.3% of the group’s total revenue of RM223.1bil,” he told a press conference yesterday to announce the national oil corporation’s financial results.

International operations accounted for the biggest contributor to the group revenue for the first time, overtaking exports.

“This signifies not only the growing importance but also the success of the group’s international operations,” he added.

Reviewing the group’s international exploration and production (E&P) business, he said the segment posted another good year despite the challenging operating environment.

The group’s international reserves stood at 6.24 billion barrels of oil equivalent (boe) compared with 6.31 billion boe last year.

Hassan said crude oil and condensates reserves fell 5.1% to 2.42 billion boe in FY08 from 2.55 billion boe previously. Natural gas reserves, however, rose by 1.6% to 3.82 billion boe from 3.76 billion boe.

The group achieved a reserves replacement ratio of 0.6 times for its international E&P operations.

Total average production from the group’s international operations was 615,100 boe per day, up 5.7% from FY07.

Crude oil and condensates production increased to 287,000 boe per day from 246,500 boe per day mainly due to higher production from Sudan, especially from Block 5A and Block 3 and 7.

However, average gas production declined by 2.1% from 335,200 boe per day to 328,100 boe per day, mainly due to shutdown of facilities for maintenance within the Malaysia-Thai Joint Development Area.

Asked whether Petronas was still keen on the Iran Pars liquefied natural gas (LNG) project after its partner, Total SA, said it would not invest more money there, he said Petronas was still assessing its involvement.

Hassan said that based on the current geopolitical situation, he expected constraints in the sourcing of equipment required for the project.

News reports said European and Asian energy companies were keen to invest in Iraq’s vast gas industry but they had come under pressure from the US, especially after Iran tested long-range missiles.

“We continue to be interested in operating in Iran,” Hassan said, adding that on the LNG projects, Petronas could not come to a final decision because of the increase in costs while discussions with Iran had not been completed yet.

When asked if Petronas would go alone in the project and in the absence of Total, he said Petronas was capable and able to undertake LNG projects, but there were also other factors which it had to assess also.

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