PETALING JAYA: Petroliam Nasional Bhd’s (Petronas) recent oilfield development contracts in Iraq are expected to benefit local oil and gas (O&G) companies in one to two years’ time.

Petronas won four of five bids it entered for the Iraq second petroleum licensing round last week.

It will be an operator in one oilfield and a consortium member of the other three.

Iraq was reported to have the world’s largest onshore oil reserves and Petronas’ involvement would increase the national oil company’s international crude oil reserves to exceed its domestic reserves of 5.5 billion barrels.

TA Securities analyst Kaladher Govindan said the Petronas venture in Iraq could augur well for local O&G companies, particularly those that had wide international exposure such as Scomi Group Bhd and KNM Group Bhd.

“Scomi is likely to be involved in the earlier part of the oilfield development there while KNM will probably be involved in the later stage.

“Scomi has vast O&G experience in various countries such as Europe and the US for many years, especially with its drilling fluids solutions,” he told StarBiz.

Scomi Oiltools, a subsidiary of Scomi Group, is one of the leading providers of drilling fluids solutions and drilling waste management services.

KNM manufactures process equipment and processing units for the oil and gas, petrochemicals, minerals processing, desalination, renewable energy, chemicals, steam generation, power and environment industries.

“But it would take a while – about one to two years – for Petronas to actually commence the development of oilfields there,” Kaladher added.

Meanwhile, ECM Libra Investment Research said Petronas and Japan Petroleum Exploration Co would jointly invest US$7bil in an oilfield there.

(Reuters yesterday reported that the two parties had signed an initial agreement to develop Iraq’s Gharaf oilfield with estimated oil reserves of 900 million barrels.)

“However, ratings agency Moody’s viewed the venture a risky one and downgraded the outlook on Petronas A1 senior unsecured ratings to negative from stable.

“The win for Petronas, nonetheless, gives a much-needed boost to oil reserves which have been dwindling,” ECM Libra said in its industry’s weekly review yesterday.

AmResearch Sdn Bhd analyst Alex Goh said the Petronas venture could be risky in terms of security but Malaysian companies could still benefit from it.

“Local O&G support services companies likely to be involved such as KNM, Dialog Group Bhd and Kencana Petroleum Bhd may do the fabrication here and ship it there,” he said.