PM: Malaysia’s eco­nomic growth con­sis­tent de­spite chal­lenges

Oil and gas to re­main core busi­ness but firm will also look at re­new­able energy

New Straits Times - - News - ZARINA ZAKARIAH KUALA LUMPUR zari­naz@me­di­

KUALA LUMPUR: Malaysia’s econ­omy con­tin­ues to thrive de­spite head­winds in the oil and gas sec­tor, said Prime Min­is­ter Datuk Seri Na­jib Razak yes­ter­day.

The con­sis­tent eco­nomic growth, which was recorded at 4.2 per cent last year, is ex­pected to hover be­tween 4.3 and 4.8 per cent this year.

Na­jib said the pos­i­tive out­look was buoyed by healthy do­mes­tic de­mand and ro­bust pri­vate sec­tor in­vest­ment.

The en­cour­ag­ing de­vel­op­ment in Malaysia’s ef­forts to mit­i­gate un­cer­tain­ties in the sec­tor was bol­stered by Petronas’ adop­tion of dig­i­tal tech­nol­ogy to en­hance efficiency and re­duce op­er­a­tional costs, among oth­ers.

“Against the back­drop of these new re­al­i­ties and ap­proaches adopted by play­ers (in oil and gas sec­tor), I am pleased to an­nounce that Malaysia’s econ­omy con­tin­ues to thrive de­spite head­winds,” Na­jib said in his speech when open­ing the 19th Asia Oil and Gas Con­fer­ence (AOGC) here.

Present were Saudi Ara­bia’s Energy, In­dus­try and Min­eral Re­sources Min­is­ter Khalid A. AlFalih, who is also Saudi Aramco chair­man, and Petronas group chief ex­ec­u­tive of­fi­cer and pres­i­dent Datuk Wan Zulk­i­flee Wan Arif­fin.

The two-day event has ral­lied em­i­nent in­dus­try play­ers, pol­i­cy­mak­ers and del­e­gates from around the world. About 350 stu­dents at­tended the con­fer­ence.

In ex­pound­ing Malaysia’s eco­nomic vi­a­bil­ity, Na­jib said to­tal gross ex­ports were ex­pected to ac­cel­er­ate at 2.7 per cent.

“(This is) due to a re­bound in ex­ports of com­modi­ties and a good de­mand for elec­tron­ics and elec­tri­cal goods, which is ex­pected to spur the man­u­fac­tur­ing sec­tor.”

He stressed the need to gal­vanise ef­forts in ad­vanc­ing the growth of the liq­ue­fied nat­u­ral gas (LNG) in­dus­try.

Na­jib said the abun­dance of gas dis­cov­er­ies had spurred ad­vance­ment in the in­dus­try in the Mid­dle East, Asia Pa­cific and Aus­tralia.

“The emer­gence of more pro­duc­ers, in­creased sup­plies and com­pet­i­tive gas prices has trans­formed LNG into an at­trac­tive energy re­source for emerg­ing economies, and one which has the ben­e­fit of be­ing far less car­bon in­ten­sive.

“I be­lieve that in­dus­try play­ers can col­lab­o­rate to sup­port the wider adop­tion of LNG by of­fer­ing in­no­va­tive com­mer­cial so­lu­tions and tech­ni­cal as­sis­tance to na­tions with fledg­ling in­ter­est in this sec­tor.”

He said Malaysia’s had so far achieved nu­mer­ous suc­cesses and achieve­ments in the LNG in­dus­try; the most notable was the con­struc­tion of the world’s first float­ing LNG fa­cil­ity named PFLNG SATU by Petronas.

“PFLNG SATU is a gamechanger for the in­dus­try, bring­ing to­gether the liq­uefi­ca­tion, pro­duc­tion, stor­age and of­fload­ing pro­cesses of LNG to off­shore gas fields.

“We are proud that Petronas has de­vel­oped this tech­nol­ogy, which will main­tain the com­pany’s tech­ni­cal edge as a key global LNG sup­plier.”

At the same time, Na­jib said the govern­ment re­mained com­mit­ted in ad­her­ing to the global stan­dards in pro­tec­tion and con­ser­va­tion, as shown in its ef­forts to re­duce green­house gas emis­sions by 45 per cent by 2030.

“We orig­i­nally pledged to re­duce it by 40 per cent back in 2009. Af­ter in­cor­po­rat­ing poli­cies to safe­guard the en­vi­ron­ment un­der the 10th Malaysia Plan, we achieved 33 per cent in re­duc­tion of emis­sions by 2013 alone.”

He said oil and gas com­pa­nies could help pro­mote the use of nat­u­ral gas and re­new­able energy.

“I am hope­ful that com­pa­nies and gov­ern­ments can form smart part­ner­ships to un­lock the full po­ten­tial of nat­u­ral gas as a vi­able op­tion — which will make both com­mer­cial and en­vi­ron­men­tal sense — as it is im­por­tant that we see these two mo­tives as sup­port­ing one an­other, not be­ing in op­po­si­tion.”

Na­jib said those who un­der­stood Malaysia were aware that they had “ev­ery rea­son to have con­fi­dence in our coun­try”.

Apart from record­ing a healthy growth in the econ­omy, the govern­ment man­aged to cre­ate 2.26 mil­lion jobs, keep­ing un­em­ploy­ment and in­fla­tion low, and in­crease Gross Na­tional In­come by al­most 50 per cent.

“This did not hap­pen by chance. It hap­pened be­cause the govern­ment had a plan.

“That plan has de­liv­ered, and is con­tin­u­ing to de­liver.”

PETRO­LIAM Na­sional Bhd (Petronas) is con­sid­er­ing di­vest­ing some “not so good” as­sets in the near fu­ture.

Pres­i­dent and chief ex­ec­u­tive of­fi­cer (CEO) Datuk Wan Zulk­i­flee Wan Arif­fin said the com­pany would make the di­vest­ment at the right time.

“Although the as­sets may not be very big, when the right time comes and if we see any op­por­tu­nity, we will do it,” he said at the CEO strate­gic di­a­logue ses­sion dur­ing the 19th Asia Oil and Gas Con­fer­ence, here, yes­ter­day.

He said Petronas had suc­cess­fully di­vested its as­sets in Africa.

Wan Zulk­i­flee said Petronas had been keep­ing its cap­i­tal ex­pen­di­ture con­sis­tent through­out the years at be­tween RM50 bil­lion and RM60 bil­lion an­nu­ally, at 50:50 ra­tio for up­stream and down­stream.

He also said in the next 20 years, oil and gas would re­main Petronas’s core busi­ness but there was op­por­tu­nity in re­new­able energy.

“I would not dis­count, af­ter hav­ing done enough as­sess­ment and iden­ti­fy­ing the op­por­tu­nity, we will also have a se­ri­ous look and maybe ac­quire other forms of re­new­able energy for in­vest­ment.”

Wan Zulk­i­flee also said cost man­age­ment and efficiency would be a stan­dard prac­tice for the com­pany re­gard­less of the oil price lev­els.

Brent crude fu­tures traded at US$49.82 (RM216) per bar­rel, up US$0.72, or 1.47 per cent, yes­ter­day.

He said since the in­cep­tion of Cost Re­duc­tion Al­liance 2.0 (Coral 2.0) in 2015, the com­pany had been able to save around RM5 bil­lion.

He said in­ef­fi­ciency must not re­turn to the sys­tem.

Wan Zulk­i­flee said although Petronas was seen to have done more cost-cut­ting in the up­stream sec­tor, it was also do­ing the same for the down­stream sec­tor.

“We have been fo­cus­ing on up­stream be­cause this in­volves a lot of col­lab­o­ra­tion with our pro­duc­tion shar­ing con­tract part­ners. We do have pro­grammes for down­stream but it may not be as widely pub­li­cised as Coral 2.0,” he added.


Prime Min­is­ter Datuk Seri Na­jib Razak with Petro­liam Na­sional Bhd (Petronas) chair­man Tan Sri Mohd Sidek Has­san (sec­ond from right), Petronas pres­i­dent and chief ex­ec­u­tive of­fi­cer Datuk Wan Zulk­i­flee Wan Arif­fin (left) and chair­man of the 19th Asia Oil and Gas Con­fer­ence, M. Firouz As­nan (right), at the of­fi­cial open­ing of the con­fer­ence in Kuala Lumpur yes­ter­day.

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