Page 6 - AsianOil Week 49

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SOUTH ASIA AsianOil
understands, despite claims to the contrary by Turkmen officials.
The head of the Turkmen-led TAPI operat- ing consortium went so far as to say in February 2018 that the Turkmen section had been fin- ished, with the focus moving to work in Afghan- istan. But only in April this year did Russian pipe mill Chelpipe report that it had won a contract to supply the entire 214 km of pipes needed for the Turkmen section, casting doubt on this claim.
TAPI has struggled because of geopolitical realities. Afghanistan is still a hotbed for terror- ism, making attacks on what would be a major infrastructure development highly likely. India is also reluctant to trust long-time adversary Pakistan with its energy security. The project has been further undermined by the fall in global
LNG prices, with India and Pakistan now see- ing LNG imports as a cheaper and more secure option. Both countries have plans to expand their LNG regasification capacity significantly over the past decade. Sources with contacts in the Turkmen government have told NewsBase that India has effectively pulled out of the ven- ture, while Pakistan too has cold feet.
TAPI is due to reach its financial close in early 2020, but there is no evidence that Turk- menistan has secured the investors it needs. The Saudi-based Islamic Development Bank (IDB) is understood to be playing some finan- cial role that NewsBase is unable to verify. Ashgabat has reached out to other Middle Eastern partners, but no firm commitments have been announced.™
SOUTHEAST ASIA
Malaysia seeks to resolve states’ Petronas royalty demands
POLICY
THE Malaysian government may allow oil-pro- ducing states such as Sarawak and Sabah to buy into state-owned Petronas, Prime Minister Mahathir Mohamad told Reuters on December 10.
Mahathir said the government could not meet the states’ demand that Petronas quadruple its royalty payments to 20% of its profit.
Sarawak and Sabah have been seeking a greater share of the company’s profits for a number of years, arguing that they are home to the majority of the company’s oil produc- tion. Reuters noted that meeting Sarawak and Sabah’s demands would cost the company $7bn per year.
“It’s fully owned by the government, it’s up to the government to sell the shares privately, not in the market, to states like Sabah and Sarawak,” Mahathir said. “Petronas is a very big company, it depends on how much [the states] can pay also.”
Mahathir said the government could also divest stakes in Petronas’ subsidiaries, noting: “What we need is to reduce our involvement, the number of shares that we hold, in order to raise some funds for ourselves.”
The company’s main listed units are Petronas Chemicals, retail arm Petronas Dagangan and gas utility Petronas Gas.
Malaysia’s total external debt amounted to MYR931.1bn ($223.57bn) at the end of June and the government has said it intends to reduce the debt ratio from 77.1% of GDP to 65% by the end of 2025.
Petronas reportedly raised about MYR6bn ($1.44bn) on December 10 by cutting its stakes in Petronas Dagangan, Petronas Gas and ship- ping company MISC, Bloomberg quoted unnamed sources as saying.
While Petronas announced that it had com- pleted the block trades to Malaysian institutional funds, it did not say how much was raised. It did say, however, that it retained a controlling stake in the firms.
The government’s proposed divestment of stakes in Petronas comes as Sarawak, and to a lesser degree Sabah, seeks greater control of its oil and gas resources.
Sarawak formed its own oil company, Petros, in March 2018 to regulate the state’s upstream ahead of the amendment of the Oil Mining Ordi- nance 1958 (OMO) in July 2018. The changes required all developers to secure licences and leases from Petros.
Negotiations between the federal and Sar- awak and Sabah governments over the states’ rights eventually saw Petronas granted reg- ulatory authority over the country’s natural resources in December 2018. In exchange Sar- awak and Sabah were to receive royalties.
Sarawak, however, introduced a new tax on all oil, gas and associated products originating from the state in January. Petronas, however, failed to respond to a notice of assessment that the state government issued in September and Sarawak authorities then sued the company in November.™
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w w w . N E W S B A S E . c o m Week 49 11•December•2019