Petronas - Partner Of A Rare Kind
New Straits Times (Malaysia), May 17
PETRONAS is slightly over 25 years old now. Quite a grown-up company, but not old enough by the standards of others in the highly competitive and capital-intensive oil and gas industry.
The national oil company knows this.
That is why it still considers itself a relatively small international player, despite wearing the badge as Malaysia's largest corporation. It also explains why mature markets in North America and Europe do not fit into the company's global strategy, then and now.
Petronas has decided that in venturing abroad, it will go to undeveloped and developing areas - notably Africa, Southeast Asia and West Asia - for a piece of the action now dominated by Exxon of the United States and the Royal Dutch/Shell Group.
The move had turned out to be a wise and fruitful one.
Since first venturing abroad - via a consortium undertaking an exploration and production venture in Myanmar - in the early 1990s, Petronas now has upstream and downstream oil and gas operations in about 20 African and Asian countries.
Its downstream activities include the liquefaction, processing, transmission, sale and transportation of liquefied natural gas, and natural gas products such as liquefied petroleum gas and processed gas.
Other activities are the refining and marketing of crude oil, petroleum products and petrochemical products, the manufacture and sale of petrochemical products and shipping and related logistics.
Upstream, Petronas is into exploration, development and production of oil and gas.
Overseas operations shared a substantial portion (about 30 per cent) of group revenues of RM42.31 billion for the year ended March 31, 1999, with the main contributor being subsidiary Engen Ltd.
The leading South African oil firm, Engen was purchased for RM1.8 billion two years ago. Through this company, Petronas clawed its way to the African market.
A Petronas executive said: "Africa has been identified as our area of growth, with South Africa playing the role as the beach head for our operations in that continent."
The Engen purchase in December 1998 enabled Petronas to acquire control of Engen's 57.5 per cent subsidiary - Energy Africa Ltd, which has upstream operations in the North Sea, Congo, Gabon and South Africa.
Energy Africa has proven reserves of 85.8 million barrels of oil equivalent, and produces an average of 14,200 barrels per day.
Petronas president and chief executive officer Tan Sri Mohd Hassan Marican once described Africa as "an interesting continent".
This is an appropriate description to match the fact that Petronas has now established a strong foothold there.
Petronas' investments in Africa are not at the expense of the host nations.
In fact, adopting the "prosper thy neighbour" policy, the company looks towards contributing to the nation-building objective for the host countries, said the Petronas executive.
In South Africa, for example, after acquiring 100 per cent of Engen, Petronas delisted the company from the Johannesburg Stock Exchange.
Then, it sold 20 per cent of the company to the Black Empowerment Enterprise - one of the bodies set up to bring majority blacks into the mainstream of economic activities.
In another case in the Sudan, Petronas together with partners Sudapet - Sudan's national oil company, National Petroleum Corporation, Talisman Energy Canada, Lundin and OMV had managed to elevate Sudan's status from an underdeveloped economy to that of an an oil-exporting nation.
Petronas is cautiously optimistic about prospects in Africa as it moved into the new century with a goal of being "a leading oil and gas multinational of choice".
Less than 10 years after it initiated its globalisation programme, the company now places itself in an enviable position in the African scene and more happy stories are in store in the new century.
Uppermost would perhaps be its multi-billion ringgit venture in Chad.
One of the poorer nations in that continent, Chad has promising opportunities in the fields of oil and gas.
Petronas could likely buy a 35 per cent stake in a three-member consortium led by Exxon which plans to undertake two projects - the development of oil fields in Doba Basin, and the construction of a pipeline across landlocked Chad through Cameroon.
This pipeline will enter the sea before reaching its final destination at a port.
US-based Exxon may likely take the majority 40 per cent stake. Another American firm, Chevron, will probably take up the remaining 25 per cent stake in the US$3.5 billion (RM13.3 billion) project.
The World Bank is also involved in the project as a non-equity partner.
The Chad project was originally given to Royal Dutch/Shell and Elf Aquitane of France but they played down the offer, citing reasons that it did not fit in with their long-term plans.
The project which will begin next year will have an oil production capacity of between 200,000 and 250,000 barrels per day.
The oil will be distributed to Kiribi Port in Cameroon via a 1,050km pipeline.
The venture into Africa had unwittingly also drawn Petronas into the centre of international politics.
In the Sudan, several nations, principally the United States, had threatened sanctions on Petronas and its partners if they insisted in continuing with their operations there.
Washington has declared that Sudan a major sponsor of international terrorism. Similar threats had earlier been issued to Petronas and other foreign players venturing in Iran.
In Iran, Petronas partnered Total of France to develop offshore oil fields, and had also teamed up with Russia's Gazprom and Total in the South Pars gas development project.
Incidentally, the Chad venture escaped the United States chastism, perhaps because of Amerian involvement, via Exxon and Chevron.
Ironically, Washington's anger over the project only revealed double standards in the matter.
However, Petronas can take comfort that the threats are a unilateral move by the United States and not endorsed by the United Nations.
For the moment, Petronas seems to have developed a niche in Africa - as an investor and a partner to host countries.
It is not a novel concept, but in Africa it is a rarity.
PETRONAS IN AFRICA
1. ALGERIA
Upstream: Exploration & Production Interest in onshore Zirara Block
Partner: Repsol
Status: Exploration
Major upstream player: Sonatrach
2. LIBYA/TUNISIA
Upstream: Exploration
Interest in the November 7th Block offshore Libta/Tunisia
Partners: Nimir Petroleum Company Ltd of Saudi Arabia and Medex Petroleum Ltd
Status: Exploration.
Potential reserves estimated at 260 million to 3000 million barrels.
3. SUDAN Upstream: Exploration & Production
i. Interest in Blocks 1, 2 and 4.
Partners: China Petroleum Corporation, Talisman Energy Canada, Sudan's National Oil Company Sudapet.
Status: Integrated development of oil fields and contruction of 1,540km pipeline from the fields to Port Sudan. Reserves estimated at 600 million barrels. Production started in June 1999.
ii: Interest in Block 5A.
Partners: Lundin, OMV and Sudapet.
Status: Exploration
4. CHAD
Upstream: Exploration & Production
Interest in Doha Basin
Partners: Exxon and Chevron
Status: Integrated development of oil fields and construction of 1,050km pipeline across Chad and through Cameroon
5. SEYCHELLES
Downstream: Terminalling facilities for distribution of petroleum prodcuts to the East
African market.
Partner: Seychelles Petroleum Co
6. SOUTH AFRICA
Upstream: Exploration & Production
Interest in Energy Africa Ltd, a subsidiary of Engen Ltd.
Status: Involved in the exploration and production of oil and gas in the North Sea, Congo, Gabon, South Africa and Sub-Saharan Africa.
Downstream: Refining/Product Retailing
Interest in Engen Ltd
Status: Engen owns and operates a 105,000 barrel per day refinery in Durban and has more than 1,400 service stations of which over 80 are located in Lesotho and Swaziland. Major downstream players: BP, Shell, Caltex & Total
7. ANGOLA
Upstream: Exploration & Production
Interest in Deepwater Block 24.
Partners: Exxon, Sonangol P&P and UMC Angola Corporation
Status: Exploration
8. GABON
Upstream: Exploration & Production
Farm-out agreement with ENI in three exploration blocks (Mpolo, Chailu and Meboun) offshore Gabon. |
