Petronas looks abroad to help cut production costs

[KUALA LUMPUR] Malaysia's state-owned oil and gas company Petronas is looking to expand output from more affordable assets abroad in an effort to cut production costs and rein in declining profits.
Petronas is seeking to produce oil at a break-even level of US$50 per barrel, from US$60 to US$70 in the past five years, said Mohd Jukris Abdul Wahab, the chief executive officer of Petronas' upstream business, which includes exploring, developing and extracting oil and gas.
The firm will focus more on countries where it already has a presence, including Canada, Suriname, Brazil, Turkmenistan and several South-east Asian nations. Still, Petronas does not rule out going into a new country if it provided 'headroom for us to grow', he added.
'We want to reshape the entire portfolio,' Jukris said in an interview on Jun 13 on the 79th floor of the steel-clad Petronas Twin Towers in Kuala Lumpur. 'We are preparing ourselves, moving into a more volatile environment in the future.'
Petronas is shifting its strategy as a drop in crude prices from a recent peak in 2022 slashed profits and forced the company to lower dividends. The state-owned company said earlier this month that it will cut about 10 per cent of its workforce to reduce costs.
While crude prices recovered some of the lost ground on Friday (Jun 13) after Israel's air strikes on Iran fuelled concerns of a wider conflict in the Middle East, the supply-demand outlook for oil points to more pressure in the longer term.
A NEWSLETTER FOR YOU
Friday, 8.30 am Asean Business
Business insights centering on South-east Asia's fast-growing economies.
Sign Up
Sign Up
'Any capital deployment for our international asset has got to provide a healthy return,' Jukris noted. 'We are dealing with a lot more risk in some of the geographies that we are present.'
Petronas' woes pose a challenge for Malaysia's government, which relies on the company for billions of US dollars in income. The national oil company has pledged RM32 billion (S$9.7 billion) in dividends this year, down from RM50 billion in 2022. The firm said in September that over the 50 years since its inception in 1974, it had injected RM1.4 trillion into the nation's economy through dividends, taxes and cash payments.
The company plans to increase the net present value of its international upstream contributions to about 60 per cent within the next five to 10 years, from about 40 to 50 per cent now, said Jukris, who started his career at the firm in 1990.
Petronas produces the equivalent of about two million barrels of oil per day in Malaysia and around 700,000 barrels abroad, Jukris said. To maintain this level of production in the face of declining output from older assets the company needs to bring in new fields, he added.
Even as Petronas looks for new assets abroad, Jukris is optimistic that Malaysia's reserves will last for 'years to come', because investors keep making new discoveries.
He said that there is still untapped potential in the country, including off the coast of Peninsular Malaysia where international oil companies have shown interest to explore.
'For the last 10, 15 years, we have been saying that our reserves will last only 15 years,' Jukris said. 'So today, we will also last another 15, 20 years.' BLOOMBERG

Try Our AI Features

Explore what Daily8 AI can do for you:

Learn with AIFact CheckingText to SpeechAI Summary

Related Articles

Straits Times

an hour ago

• Straits Times

Ukraine asks allies to allocate 0.25% of GDP to boost its weapons production

Ukrainian servicemen preparing to fire a howitzer towards Russian troops, at a front line position in Ukraine's Zaporizhzhia region, on June 16. PHOTO: REUTERS Ukraine asks allies to allocate 0.25% of GDP to boost its weapons production KYIV - President Volodymyr Zelensky has called on Ukraine's Western partners to allocate 0.25 per cent of their GDP to helping Kyiv ramp up weapons production and said the country plans to sign agreements this summer to start exporting weapon production technologies. In remarks released for publication by his office on June 21, Mr Zelensky said Ukraine was in talks with Denmark, Norway, Germany, Canada, the United Kingdom, and Lithuania to launch joint weapon production. 'Ukraine is part of Europe's security and we want 0.25 per cent of the GDP of a particular partner country to be allocated for our defence industry and domestic production,' Mr Zelensky said. As the war with a bigger and better-equipped Russia has intensified in recent weeks, Ukraine's need for new weapons and ammunition is constantly growing. This year, Kyiv had secured US$43 billion (S$55 billion) to finance its domestic weapon production, Mr Zelensky said. Member nations of the Nato military alliance are expected to meet next week in The Hague, to discuss higher defence spending. Nato Secretary-General Mark Rutte has proposed that countries should each agree to spend 5 per cent of their GDP on defence and security measures. Mr Zelensky said he was likely to visit the Nato summit, adding that several meetings with Western leaders had been set up on the sidelines. He also said that he hoped to meet US President Donald Trump. Last week, Mr Zelensky attended the Group of Seven summit in Canada as he sought to discuss stronger sanctions against Russia and more military support for Ukraine with Mr Trump there. But he failed to meet the US President as Mr Trump left a day early for Washington to address the Israel-Iran conflict. Ukraine currently covers about 40 per cent of its defence needs with domestic production, and the government is constantly looking for ways to increase production further. Kyiv plans to launch joint weapon production outside of the country and will start exporting some of its military production technologies, Mr Zelensky said. 'We have launched a programme 'Build with Ukraine', and in the summer we will sign relevant agreements to start exporting our technologies abroad in the format of opening production lines in European countries,' Mr Zelensky said. The discussions focused on producing different types of drones, missiles, and potentially artillery, he said. REUTERS More on this Topic Zelenskiy says Ukraine developing interceptor drones to counter Russian attacks Join ST's Telegram channel and get the latest breaking news delivered to you.

Straits Times

8 hours ago

• Straits Times

Meta launches $513 Oakley AI glasses with 3K video recording

The display-free Oakley glasses are one component of the overall Meta AI hardware strategy. PHOTO: META Meta Platforms Inc. is going up-market with its surprise hit smart glasses, rolling out new models with Oakley that are aimed at athletes and include improved video recording. The company on June 20 launched new models based on Oakley's HSTN design, marking the company's first expansion away from Ray-Ban for its display-free glasses. Like the original models, the Oakley versions can make and take phone calls, play music, take pictures and video and use Meta's artificial intelligence to answer questions about the surrounding environment. The new versions, which start at US$399 (S$513) and go up to US$499 for a limited edition model with gold-colored accents, include about double the battery life, video-recording at 3K resolution and water resistance. 'We are increasingly seeing performance use cases with the Ray-Bans like people wearing them on roller coasters, cycling and being around water, so we're trying to lean into that,' says Mr Alex Himel, the company's vice-president in charge of wearables, in an interview. Arriving at its second glasses brand was far from a sure thing. Meta's first glasses, the Ray-Ban Stories, flopped in 2021. But its follow-up version in 2023 was a massive success, giving the social networking giant a real potential hardware stronghold in the artificial intelligence race. 'It was crazy. Popularity caught us by surprise a bit,' Mr Himel said. The Ray-Bans were 'going to be the last display-less pair of glasses. We said we'll take two swings at it, and if it doesn't work we'll go all-in on augmented reality'. Instead, beyond the latest Oakley model, the company has a multi-year road map for the display-less category and is planning a follow-up pair of Oakley glasses based on the Sphera design for later in 2025 , according to people with knowledge of the matter. That pair will be aimed at cyclists and have a centred camera. The model on June 20 has a camera positioned in the upper corner like the Ray-Ban version. The display-free glasses are one component of the overall Meta AI hardware strategy. The company is planning to introduce higher-end glasses with a display to view notifications and the camera view finder later in 202 5, Bloomberg News has reported. In 2027, it aims to roll out its first true augmented reality glasses, which will blend digital apps with the real world. Meta's form-factor has caught on, with several other technology companies working on competitors. Apple Inc. is planning to introduce its first glasses product at the end of 2026, Bloomberg News has reported. That device will operate similarly to the Meta product but better synchronise with the rest of the Apple ecosystem. Inc. also sells glasses, but their current models lack cameras. Mr Himel, who said Meta has sold millions of glasses and has a 'nice, increasing multiple' of purchases on a year-over-year basis each week, attributed the increased popularity to the Ray-Bans improving across a large number of 'small things.' He said the audio quality and microphones started to surpass standalone earbuds, while the camera and AI quality also improved. Still, Mr Himel said battery life remains the 'number one complaint' about the Ray-Ban versions. The new Oakley models can run for 8 hours on a single charge, with the charging case holding 48 hours of juice. 'You should expect a 40 per cent bump with these' he says, attributing the improvement to new battery chemistry and software optimisations – not larger battery packs. Like Ray-Ban, Oakley is owned by EssilorLuxottica SA, which calls Oakley its second most popular brand after Ray-Ban. Mr Himel said Meta will roll out new brands under the EssilorLuxottica portfolio 'as fast as we can. 'We're going to have to move very quickly because in the world of fashion, stuff moves very quickly,' he says. 'The stuff that is a hit right now might not be a year from now. We need to be fast to hit all the brands that we'd like to.' The first Oakley model, becoming available for pre-order on July 11, will be the US$499 limited edition pair. The US$399 versions – which come in grey, black, brown and clear colors – will be released in the coming months. There will be versions with clear, transition and polarised lenses. Like with the Ray-Bans, users can swap the lenses for prescription optics. The glasses will be available in the US, Canada, UK, Ireland, France, Italy, Spain, Austria, Belgium, Australia, Germany, Sweden, Norway, Finland, and Denmark, according to Meta. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.

Business Times

10 hours ago

• Business Times

US may target Samsung, Hynix, TSMC operations in China: sources

[BENGALURU] The US Department of Commerce is considering revoking authorisations granted in recent years to global chipmakers Samsung, SK Hynix and Taiwan Semiconductor Manufacturing Company (TSMC), making it more difficult for them to receive US goods and technology at their plants in China, according to sources familiar with the matter. The chances of the United States withdrawing the authorisations are unclear. But with such a move, it would be harder for foreign chipmakers to operate in China, where they produce semiconductors used in a wide range of industries. A White House official said the United States was 'just laying the groundwork' in case the truce reached between the two countries fell apart. But the official expressed confidence that the trade agreement would go forward and that rare earths would flow from China, as agreed. 'There is currently no intention of deploying this tactic,' the official said. 'It's another tool we want in our toolbox in case either this agreement falls through or any other catalyst throws a wrench in bilateral relations.' Shares of US chip equipment makers that supply plants in China fell when The Wall Street Journal first reported the news earlier on Friday (Jun 20). KLA dropped 2.4 per cent, Lam Research fell 1.9 per cent and Applied Materials sank 2 per cent. Shares of Micron, a major competitor to Samsung and SK Hynix in the memory chip sector, rose 1.5 per cent. A TSMC spokesperson declined to comment. Samsung and Hynix did not immediately respond to requests for comment. Lam Research, KLA and Applied Materials did not immediately respond, either. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up In October 2022, after the United States placed sweeping restrictions on US chipmaking equipment to China, it gave foreign manufacturers such as Samsung and Hynix letters authorising them to receive goods. In 2023 and 2024, the companies received what is known as Validated End User (VEU) status in order to continue the trade. A company with VEU status is able to receive designated goods from a US company without the supplier obtaining multiple export licenses to ship to them. VEU status enables entities to receive US-controlled products and technologies 'more easily, quickly and reliably', as the Commerce Department website puts it. The VEU authorisations come with conditions, a source familiar with the matter said, including prohibitions on certain equipment and reporting requirements. 'Chipmakers will still be able to operate in China,' a Commerce Department spokesperson said in a statement when asked about the possible revocations. 'The new enforcement mechanisms on chips mirror licensing requirements that apply to other semiconductor companies that export to China and ensure the United States has an equal and reciprocal process.' Industry sources said that if it became more difficult for US semiconductor equipment companies to ship to foreign multinationals, it would only help domestic Chinese competitors. 'It's a gift,' one said. REUTERS