Petronas prepares life as subdued oil price remains
KUALA LUMPUR: Fiscal discipline, prudent spending and delivering value over volume are the three values instilled by Petronas to prepare life as oil prices are forecast to average at below US$ 50 per barrel for the foreseeable future.
Executive vice-president and chief executive officer (CEO) for upstream, Datuk Mohd Anuar Taib said based on these principles, the national oil company would continue to undertake portfolio high grading to ensure its assets have the strategic fit of value for the company to grow.
“Although we still put a lot of ef fort on production and exploration, it is all driven by how much we can afford and what kind of return we will get,” he told Bernama in an interview recently.
For assets seemingly having no strategic fit of value, Petronas, he added, would work on either relinquishing or divestment as was seen in its decision to relinquish Block 1 and 2 in Cuu Long Basin in Vietnam this month.
However, from time to time, Petronas too would add new assets into its portfolio to compensate the
Although we still put a lot of effort on production and exploration, it is all driven by how much we can afford and what kind of return we will get. Datuk Mohd Anuar Taib, Petronas executive vice-president and chief executive officer for upstream
depleting resources, he said.
According to Mohd Anuar, Petronas currently has a presence in 23 countries, in the various phases of upstream operations.
He said the company would continue to review its operations in all the countries, looking at value in the midst of portfolio high grading, with many key actions to be taken as it looked for growth.
“Portfolio high grading becomes our norm as we look at profitability and future opportunities and if it (asset) doesn’t meet the required value or doesn’t meet the strategic fit, we will look at ways to either divest or to exit.
“At the same time we also look at our portfolio, look at the areas that we need to improve, so we would be able to be sustainable in the long run,” he explained.
As for fiscal discipline, he pointed out that the company’s continued drive for efficiency had managed to reduce its worldwide average unit production cost for the past three years to US$7 per barrel from US$10 per barrel.
“Go ing forwa rd, what is important is for us to be more focused, value driven and (maintain) fiscal discipline and we like to do things in an integrated manner,” he said.
While Petronas continues to expand its presence overseas, Malaysia will remain the most important location as this is where the company’s heart is and at least half of its yearly capital expenditure will be allocated to this country.
“Malaysia is our heartland where we can deliver more integrated value.
“Every molecule of gas in Sarawak will be connected to the liquefied natural gas ( LNG) business that we have and every molecule of gas in Peninsular Malaysia will be connected to our petrochemical business,” he said.
Mohd Anuar said Petronas would focus on gas development in the country to ensure it has long-term sustainable integrated value whether through LNG or the petrochemical business.
At the same time, it will also address the need to produce more oil by promoting exploration in the deepwater and ultra- deepwater areas.
“Because we think this is the last oil province frontier that we need to actually exploit more or work towards finding more oil and help us in delivering more oil for Malaysia,” he said. — Bernama