* Upstream budget for 2018 at 26 bln rgt
* Spending still half 2015 upstream budget
* Petronas suspends sale of stake in SK316 gas block(Adds additional comments on upstream plans)
By A. Ananthalakshmi
KUALA LUMPUR, March 21 (Reuters) - Malaysian state energyfirm Petroliam Nasional Berhad (Petronas) isincreasing capital expenditure for upstream activities slightlyin 2018 from last year, upstream chief executive Mohd Anuar Taibsaid on Wednesday.
Petronas, like other oil majors, was hit by the plunge inoil prices from mid-2014 highs, but sharp cost cuts since thenand a modest price recovery that began last year has helped thefirm boost profits so it can spend more.
Petronas allocated 26 billion ringgit ($6.6 billion) forupstream expenditure in 2018, Anuar said, adding this wasslightly more than 2017 although he did not give a precisecomparison.
This is still little more than half the 48.7 billion ringgitspent on upstream activities in 2015.
"We want the capital discipline. The challenge we have seenin the past is that when everybody starts going for activitiesat the same time, then the whole supply chain is stretched. Thatadds to the costs," Anuar told reporters on the sidelines of theOTC Asia conference.
He said Petronas would drill about 110 to 120 wells thisyear, and maintain exploration at 23 to 25 wells in Malaysia.
Petronas was looking at exploration in Southeast Asia andwanted to develop assets in the region with partners, he said.
The firm is also looking at growth opportunities in theMiddle East, Anuar said, without giving details.
Petronas won six of 19 Gulf of Mexico deepwater oil and gasblocks awarded in an auction this year, after previously pickingup three other blocks in the area.
Petronas, Malaysia's only Fortune 500 company, is a keycontributor to government coffers and is one of the country'slargest employers with a workforce of more than 50,000.
After oil prices plunged from above $110 a barrel inmid-2014 to below $30 in early 2016, Petronas said it wouldslash spending by 50 billion ringgit in the following fouryears. It put several projects on hold and said it would sellsome assets.
Oil prices have since recovered some ground. Benchmark Brentwas trading around $68 a barrel on Wednesday.
Petronas kicked off a process last year to sell a stake ofup to 49 percent, worth an estimated $1 billion, in the SK316offshore gas block in the eastern Malaysian state of Sarawak,Reuters reported.
Thailand's PTT Exploration and Production, Totaland some Japanese firms have expressed interest. PTT saidearlier on Wednesday it was in a second round of bidding for thestake.
But Anuar said on Wednesday the gas block stake sale processhad been suspended, without explaining why. "We have stopped thedivestment process," he said.
($1 = 3.9240 ringgit)(Reporting by A. Ananthalakshmi; Additional reporting by EmilyChow and Florence Tan; Editing by Tom Hogue)
