Petronas potential sale reflects broader trend

New Straits Times

21 hours ago

KUALA LUMPUR: Petroliam Nasional Bhd's (Petronas) potential sale of its stake in an oilfield in Brazil reflects a broader trend among state-owned oil and gas companies to streamline their global portfolios, economists said.
The potential divestment, which could raise about US$1 billion (RM4.23 billion), comes as Petronas continues to reshape its international upstream portfolio in line with long-term strategic priorities and shifting global energy dynamics, they added.
It was reported that the national oil company was working with Bank of America Corp to market its 50 per cent stake in the offshore deepwater oilfield in Brazil's Campos Basin.
The Tartaruga Verde field is operated by Brazil's national oil company Petrobras, which owns the remaining 50 per cent.
Economist Samirul Ariff Othman said Petronas is in the midst of restructuring its upstream portfolio to boost resilience, prioritise value creation and ensure long-term sustainability in the face of market and geopolitical uncertainties.
The strategy involves focusing on assets with strong break-even economics while minimising the group's presence in regions with elevated risk.
"In recent years, the company has prioritised monetising non-core assets and reinvesting in areas aligned with its long‑term strategy, including unconventional resources in Argentina and Canada, and focused conventional assets in Brazil, Mexico, Turkmenistan, Iraq and Vietnam.
"Selling the 50 per cent stake reflects this approach: monetising an offshore minority interest acquired in 2019, freeing capital for re-investment in more core or higher-return geographies," he told Business Times.
Samirul said the national oil and gas company has been steadily withdrawing from non-core or higher-risk international assets as part of its portfolio optimisation strategy.
"Ongoing divestments across Africa, including exits from Chad and South Sudan, align with re-focusing efforts.
"Earlier moves included exiting Venezuela and underperforming European ventures, emphasising a pivot toward higher-grade, lower-risk upstream opportunities," he added.
He added that the move to divest the Brazil stake aligns with Petronas' long-term strategy of shedding non-core offshore assets in order to redirect capital towards key operations and minimise geopolitical or operational risks.
Samirul said the reported Petronas move to engage Bank of America to market its Tartaruga Verde stake reflects its ongoing strategic shift, streamlining its upstream portfolio in line with the 2024-2026 Activity Outlook, while redirecting capital toward assets with better break-even performance and stronger alignment with its Net Zero 2050 goals.
Similarly, Universiti Teknologi Mara Business Management Faculty senior lecturer Dr Mohamad Idham Md Razak said Petronas' potential exit from the Brazilian asset is consistent with a wider realignment seen across the oil and gas industry.
"This divestment aligns with strategic shifts aimed at reallocating resources towards more lucrative or strategically aligned assets.
"The Brazilian offshore asset, while potentially profitable, might present operational challenges or uncertainties such as geopolitical risks, currency fluctuations, or regulatory complexities that make it a candidate for divestment," Idham said when contacted.
He said the move could form part of a wider strategy to restructure Petronas' portfolio in line with global energy transition trends, potentially unlocking capital for renewable energy investments or higher-yield hydrocarbon projects in other regions.
"Petronas' potential exit from international assets, such as the Tartaruga Verde oilfield, could be indicative of a strategic refocusing or a risk-aversion strategy in response to the evolving global energy landscape.
"This trend might reflect a broader industry recalibration where companies, in the wake of the pandemic's economic impact and shifting towards cleaner energy sources, are divesting from assets that are either less profitable or do not align with their long-term strategic objectives," he added.
Idham said this could be part of a larger trend of asset reallocation to support domestic energy security and decarbonisation efforts.
"However, this does not necessarily imply a complete retreat from international ventures, as state-owned enterprises often have mandates to secure energy resources globally, and strategic disinvestments could be offset by new investments or partnerships in more geopolitically stable or strategically important regions," he explained.