Petronas Raises 2018 Spending for Upstream Work

Petronas, like other oil majors, was hit by the plunge in oil prices from mid-2014 highs, but sharp cost cuts since then and a modest price recovery that began last year has helped the firm boost profits so it can spend more.

Petronas allocated 26 billion ringgit ($6.6 billion) for upstream expenditure in 2018, Anuar said, adding this was slightly more than 2017 although he did not give a precise comparison.

This is still little more than half the 48.7 billion ringgit spent on upstream activities in 2015.

"We want the capital discipline. The challenge we have seen in the past is that when everybody starts going for activities at the same time, then the whole supply chain is stretched. That adds to the costs,"

Anuar told reporters on the sidelines of the OTC Asia conference.

He said Petronas would drill about 110 to 120 wells this year, and maintain exploration at 23 to 25 wells in Malaysia.

Petronas was looking at exploration in Southeast Asia and wanted to develop assets in the region with partners, he said.

The firm is also looking at growth opportunities in the Middle East, Anuar said, without giving details.

Petronas won six of 19 Gulf of Mexico deepwater oil and gas blocks awarded in an auction this year, after previously picking up three other blocks in the area.

Petronas, Malaysia's only Fortune 500 company, is a key contributor to government coffers and is one of the country's largest employers with a workforce of more than 50,000.

After oil prices plunged from above $110 a barrel in mid-2014 to below $30 in early 2016, Petronas said it would slash spending by 50 billion ringgit in the following four years. It put several projects on hold and said it would sell some assets.

Oil prices have since recovered some ground. Benchmark Brent was trading around $68 a barrel on Wednesday.

Petronas kicked off a process last year to sell a stake of up to 49 percent, worth an estimated $1 billion, in the SK316 offshore gas block in the eastern Malaysian state of Sarawak, Reuters reported.

Thailand's PTT Exploration and Production, Total and some Japanese firms have expressed interest. PTT said earlier on Wednesday it was in a second round of bidding for the stake.

But Anuar said on Wednesday the gas block stake sale process had been suspended, without explaining why. "We have stopped the divestment process," he said.