RPT-UPDATE 2-Malaysia names new chief for state oil co Petronas

(Repeats from Wednesday without changes)

* Malaysia government names industry professional to Petronas

* Key appointment to oversee Petronas expansion

* Petronas CEO faces political pressure, budget deficit (Adds analyst comments, details)

By Soo Ai Peng and David Chance

KUALA LUMPUR, Feb 3 (Reuters) - Malaysia on Wednesday named a new head for state oil giant Petronas to replace gritty veteran Hassan Merican who turned the firm into a global powerhouse and resisted government demands on its revenues.

The government named Shamsul Azhar Abbas, 57, from Petronas [PETR.UL] shipping subsidiary MISC (MISC.KL) as chief executive officer effective Feb.10, Prime Minister Najib Razak said in a statement on Wednesday.

There had been concerns the Malaysian government would name a political appointee to Petronas, a company that accounts for almost half the country's budget revenues and which needs to win reserves overseas to offset declining domestic production.

"It is good they got an internal appointment to allow continuity, but these are tough shoes to fill," Abdul Jalil Rasheed, fund manager at Aberdeen Fund Management, said. "He needs to ensure he does not bow to external pressures."

Hassan Merican has run Petronas since 1995 and was known for resisting excessive government demands on Petronas revenues, although the company funded the Petronas Twin Towers and the construction of a new capital city.

Petronas has, in recent years, driven its search for reserves overseas and recently won contracts in Iraq and Venezuela. More controversially, it is involved in natural gas projects in Iran and oil exploration in Sudan.

Petronas is also a partner in deals with oil majors like Exxon Mobil Corp (XOM.N) in Malaysia.

"Going forward, Petronas has to deal with declining production at home and it needs all its resources to ensure that its Iraqi oil venture is a success," Victor Shum, analyst with Purvin and Gertz in Singapore, said.

"Petronas also faces the challenge with its downstream operations. That part of the industry faced its worst period of profitability in the last month of 2009."

MALAYSIA: PETRONAS SUBSIDIARY

Unlisted Petronas profits in the first half of fiscal year 2010 nearly halved as the global recession hit demand and crude oil prices tumbled from year-ago levels. [ID:nKLR528094]

Still, in its last fiscal year ended March 2009, Petronas pumped revenues of $75 billion in its latest fiscal year to March 2009 and it made a net profit of 52.5 billion ringgit ($15.45 billion).

Rarely for a state enterprise, Petronas debt is rated more highly than the sovereign state at with its standalone rating put at "AA-minus" by Standard & Poor's above the "A-minus" rating for Malaysia, leading Malaysia to be dubbed a "subsidiary of Petronas" by some credit analysts.

In the year to March 2009 it kicked in 75 billion ringgit to federal revenues in dividends and taxes, leading to concerns from CEO Hassan that it was underinvesting relative to oil majors.

Malaysia ran its biggest budget deficit in over 20 years in 2009 at 7.4 percent of gross domestic product.

Hassan said it had 21 percent of group profit available for investment versus 57.1 percent that he said was available to oil majors. [ID:nKLR74641]

"Part of Petronas' standing is attributable to its CEO and senior executives," Stewart Forbes, executive director of the Malaysian International Chamber of Commerce and Industry (MICCI) told Reuters ahead of Wednesday's announcement.

MICCI represents 1,000 members who represent over 110 billion ringgit of investment in Malaysia, including oil producers like Exxon Mobil and exploration and production companies like Murphy Oil Corp. (MUR.N).

"If Petronas is to continue to enjoy that reputation internationally, then clearly, it has to sustain that quality of that individual at the very highest echelon within the organisation," he added. ($1=3.397 Malaysian Ringgit) (Writing by Niluksi Koswanage; Editing by Amanda Cooper)