Casting doubt that it was purely a commercial decision, PKR today said that Malaysia’s state oil company Petronas has paid at least twice the value for its shale gas reserves in Canada last year.
PKR’s director of strategy Rafizi Ramli, who had worked with Petronas for seven years previously, said that the figures didn’t make sense for it to gamble on the US$5.3 billion (RM16 billion) purchase of Progress Energy, finalised a year ago. He compared the deal with other purchases made by Petronas recently in Brazil and also an Australian oil buy by Bursa-listed Hibiscus Petroleum.
This was Malaysia’s biggest single investment in Canada and Rafizi has questioned if Petronas was “influenced by hidden hands”.
“It is my professional opinion that the decision to buy Progress Energy is not a commercial decision alone,” Rafizi told reporters at PKR headquarters in Petaling Jaya today.
He then urged Prime Minister Najib Abdul Razak, to whom the national oil company answers, to come clean on the deal.
Rafizi said he is also pressing for answers from Dr Mahathir Mohamad, who was until recently Petronas adviser, to answer for the exorbitant buy.
PKR’s director of strategy Rafizi Ramli, who had worked with Petronas for seven years previously, said that the figures didn’t make sense for it to gamble on the US$5.3 billion (RM16 billion) purchase of Progress Energy, finalised a year ago. He compared the deal with other purchases made by Petronas recently in Brazil and also an Australian oil buy by Bursa-listed Hibiscus Petroleum.
This was Malaysia’s biggest single investment in Canada and Rafizi has questioned if Petronas was “influenced by hidden hands”.
“It is my professional opinion that the decision to buy Progress Energy is not a commercial decision alone,” Rafizi told reporters at PKR headquarters in Petaling Jaya today.
He then urged Prime Minister Najib Abdul Razak, to whom the national oil company answers, to come clean on the deal.
Rafizi said he is also pressing for answers from Dr Mahathir Mohamad, who was until recently Petronas adviser, to answer for the exorbitant buy.
Rafizi said Petronas’ full acquisition of Progress Energy, said to be one of the biggest holders of shale gas reserves acreage in British Columbia, worked out to be US$16.42 per barrel of oil equivalent (boe). Progress Energy is reported to hold 316.67 million boe of shale gas, Rafizi said.
This compares to Hibiscus Petroleum which acquired 7.3 million barrels of oil reserves for the equivalent of US$7 a barrel in August last year. In another deal, Petronas also agreed in May to buy some some 285 million of offshore oil reserves from Brazilian oil and gas company OGX at the equivalent of US$7.46 a barrel, Rafizi said.
However, it was recently reported that Petronas was backing out of the US$850 million OGX deal.
This compares to Hibiscus Petroleum which acquired 7.3 million barrels of oil reserves for the equivalent of US$7 a barrel in August last year. In another deal, Petronas also agreed in May to buy some some 285 million of offshore oil reserves from Brazilian oil and gas company OGX at the equivalent of US$7.46 a barrel, Rafizi said.
However, it was recently reported that Petronas was backing out of the US$850 million OGX deal.
More costly to extract shale gas
Rafizi said that based on his experience working in the upstream oil sector, it was more costly to extract and market shale gas, which is natural gas buried in the crevices of underground rocks than crude oil.
Therefore, Petronas should have acquired its gas reserves at a cheaper price per barrel compared to oil, he said.
In October, PM Najib had visited Canada and boasted that Petronas was now the biggest foreign investor in Canada. Beyond the purchase of Progress Energy, Petronas is due to pump in billions more into the developed country to build pipelines and export facilities to commercialise its shale gas reserves through liquefied natural gas (LNG) exports.
On its Progress Energy purchase, Petronas president and CEO Shamsul Azhar Abbas had said that the company, Malaysia’s largest corporation, bought Canadian reserves in a bid to stay profitable and compensate for declining domestic output. This was its biggest overseas investment since its formation in 1974 under the Petroleum Development Act. Previously, it also stumped out billions for shale gas reserves in Australia.
Globally, Petronas has exploration and production presence in over 22 countries in South-East Asia, the Middle East, Central Asia, Latin America and Africa. These overseas ventures account for almost a quarter of its total oil and gas reserves.
Rafizi said that based on his experience working in the upstream oil sector, it was more costly to extract and market shale gas, which is natural gas buried in the crevices of underground rocks than crude oil.
Therefore, Petronas should have acquired its gas reserves at a cheaper price per barrel compared to oil, he said.
In October, PM Najib had visited Canada and boasted that Petronas was now the biggest foreign investor in Canada. Beyond the purchase of Progress Energy, Petronas is due to pump in billions more into the developed country to build pipelines and export facilities to commercialise its shale gas reserves through liquefied natural gas (LNG) exports.
On its Progress Energy purchase, Petronas president and CEO Shamsul Azhar Abbas had said that the company, Malaysia’s largest corporation, bought Canadian reserves in a bid to stay profitable and compensate for declining domestic output. This was its biggest overseas investment since its formation in 1974 under the Petroleum Development Act. Previously, it also stumped out billions for shale gas reserves in Australia.
Globally, Petronas has exploration and production presence in over 22 countries in South-East Asia, the Middle East, Central Asia, Latin America and Africa. These overseas ventures account for almost a quarter of its total oil and gas reserves.
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