Malaysia's oil giant Petronas looks abroad to help cut production costs
[KUALA LUMPUR] Petroliam Nasional (Petronas), Malaysia's state-owned oil and gas company, is looking to expand output from more affordable assets abroad in an effort to cut production costs and rein in declining profits.
Petronas, as the company is known, 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 said.
'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.
'Any capital deployment for our international asset has got to provide a healthy return,' Jukris said. 'We are dealing with a lot more risk in some of the geographies that we are present.'
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
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 said.
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 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
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Straits Times
2 hours ago
- Straits Times
Shipping on high alert in Middle East after US strikes on Iran
Shipping on high alert in Middle East after US strikes on Iran The shipping industry was placed on high alert on June 22 with warnings that Tehran could retaliate against commercial vessels following US airstrikes against Iran's nuclear facilities. Greece, home to more oil-tanker capacity than any other nation, cautioned its ship owners to think again if they're considering entering the Persian Gulf in the wake of US airstrikes. Vessels planning to sail through the Strait of Hormuz, the waterway that sits at the mouth of the region, should 'reassess passage' until the situation normalises, according to a circular seen by Bloomberg that its shipping ministry sent to vessel owners. It advised waiting in nearby safe ports. Naval forces in the area warned that ships, especially US-linked ones, could be at heightened risk. Shipping giant A.P. Moller - Maersk A/S said it continues to transit Hormuz but is ready to re-evaluate its position based on the information available. The actions of the maritime industry – and its risk tolerance – will be a critical detail in the wake of the strikes because of Iran's proximity to the Strait of Hormuz, a conduit for a fifth of the world's oil and an unavoidable sea route into the Persian Gulf. Athens' warning is the latest sign of pressure on shipping markets as attacks on Iran escalate. Tanker earnings already soared by almost 90 per cent since Israel first started conducting airstrikes on June 13. As one of the world's largest ship-owning nations, advice to Greece's vessel owners would have a major impact on commodity transportation markets, especially oil. There's every chance shipowners will ignore the advice because the Persian Gulf is too-important a region for them to avoid and rates can always rise to compensate for the risk of sailing in the region. Operators that do decide to transit Hormuz should adopt the highest security level available and maintain the maximum possible distance from Iranian waters, Greece's ministry added. In June 22's notice, the Greek ministry cited concern around a possible closure of Hormuz as a reason behind its message. Officials at three Greek tanker companies said they were still assessing the situation. One did indicate he might still allow his tankers to enter the region, while another said their ships would likely stay away. Greek government spokesman Pavlos Marinakis said in a statement that the government, via the shipping ministry, advised Greek-flagged and Greek-owned ships in the area of the Strait of Hormuz to go to safe port until the situation normalises. Bigger risk Naval groups are also warning of greater risk. On June 22, the Joint Maritime Information Centre, a liaison between navies and merchant shipping in the region, said that the Washington's airstrikes mean US-linked ships sailing through the Red Sea and Gulf of Aden face a high risk of attack. Yemen's Houthi rebel group issued fresh threats against American commercial and naval ships earlier in the day. There had been a ceasefire between the US and the Houthis in early May, geared toward limiting the group's attacks on the US navy. US-linked ships should consider re-routing, the JMIC said in its update. Still, it said some US-associated vessels have successfully transited the Strait of Hormuz, 'which is a positive sign for the immediate future.' Separately, the European Union's naval force in the region raised its threat assessment for US-linked vessels as a result of the strikes. It now sees a severe threat to ships linked to the US and Israel and a low risk for all other ships. 'This does not exclude the possibility of all merchant vessels being targeted in the future,' it said in an update published by France's Mica Centre, which helps co-ordinate global maritime security. BLOOMBERG Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
8 hours ago
- Straits Times
Cambodia PM orders halt to fuel imports from Thailand
Cambodia PM Hun Manet said energy companies would be able to 'import sufficiently from other sources to meet domestic fuel and gas demands' in the country. PHOTO: AFP – Cambodian Prime Minister Hun Manet said on June 22 that the country would halt all fuel imports from neighbour Thailand, as tensions escalate over an ongoing border dispute. The nations have been at loggerheads since a Cambodian soldier was killed in May as troops exchanged fire in a disputed area known as the Emerald Triangle, where the borders of both countries and Laos meet. 'Starting from midnight tonight, all fuel and gas imports from Thailand will be halted,' he said in a Facebook post. He said energy companies would be able to 'import sufficiently from other sources to meet domestic fuel and gas demands' in the country. Thailand has placed restrictions on several border checkpoints citing 'national security', and on June 22 Cambodia closed two crossings in retaliation. The border spat has triggered political turmoil in Thailand after a phone call between leaders was leaked, prompting domestic criticism of Thai Prime Minister Paetongtarn Shinawatra's conduct. The ruling Thai party's biggest coalition partner withdrew earlier this week as calls grew louder for her to step down, and she was forced to apologise over her phone conversation with former Cambodian leader Hun Sen. Thailand was Cambodia's third-biggest trading partner in 2022, according to the World Bank, with imports reaching US$3.8 billion (S$4.89 billion), of which fuels accounted for 27 per cent. Earlier on June 22, Cambodia's defence ministry accused the Thai army of violating an agreement by escorting some 150 cyclists to visit a disputed temple near the border. The Thai army denied any violation, saying there had been a 'misunderstanding'. AFP Join ST's Telegram channel and get the latest breaking news delivered to you.
Straits Times
15 hours ago
- Straits Times
Tesla expected to launch long-discussed robotaxi service
The long-awaited launch follows the dramatic meltdown earlier this month in relations between Mr Musk and Mr Trump, which saw a cascade of bitter attacks from both men. PHOTO: REUTERS NEW YORK - Tesla is expected to begin offering robotaxi service on June 22 in Austin, an initial step that Mr Elon Musk's backers believe could lead to the company's next growth wave. The launch – which comes as Mr Musk refocuses on his business ventures following a controversial stint in Mr Donald Trump's administration – will employ the Model Y sport utility vehicle rather than Tesla's much-touted Cybercab, which is still under development. The long-awaited launch follows the dramatic meltdown earlier this month in relations between Mr Musk and Mr Trump, which saw a cascade of bitter attacks from both men. Since then, Mr Musk has publicly expressed regret for some of his statements, while his company's Texas operation has readied the Austin push – part of a major drive on autonomous technology and artificial intelligence that Tesla bulls believe will yield huge profits. This group includes Wedbush analyst Daniel Ives, who said autonomous technology could be a catalyst for potentially US$1 trillion (S$1.29 trillion) in additional market value or more. 'There are countless skeptics of the Tesla robotaxi vision with many bears thinking this day would never come,' said Mr Ives, who predicted that Trump's administration would clear roadblocks for Tesla and pivot from the recent 'soap opera'. 'The golden era of autonomous for Tesla officially kicks off on Sunday in Austin,' Mr Ives said in a note on June 20 . Business-friendly Texas But the unveiling in the Texas state capital comes amid questions about how Tesla will try to overcome criticism of Mr Musk's activities for Mr Trump. Tesla saw profits plunge 71 per cent in the first quarter following poor sales in several markets. In picking Austin for the debut of the autonomous vehicle (AV) service, Mr Musk is opting for a US state known for its company-friendly approach to regulation. 'Texas law allows for AV testing and operations on Texas roadways as long as they meet the same safety and insurance requirements as every other vehicle on the road,' the Texas Department of Transportation told AFP. An Austin website listed six autonomous vehicle companies at various stages of operation: ADMT (Volkswagen), AVRide, Tesla, Zoox (Amazon), Motional (Hyundai) and Waymo (Alphabet/Google). But the Texas legislature this year enacted a new bill that requires prior authorisation from the state's Department of Motor Vehicles before companies can operate on a public street without human drivers, a group of seven Democratic lawmakers said in a June 18 letter to Tesla. Citing the enhanced system, the lawmakers asked Tesla to delay testing until after the law takes effect September 1. If Tesla proceeds with the launch this weekend, 'we request that you respond to this letter with detailed information demonstrating that Tesla will be compliant with the new law,' the letter said. Starting slow Mr Musk had initially planned the launch for June 12, before pushing back, saying he was being 'super paranoid' about safety. 'We want to deliberately take it slow,' Mr Musk said in a May 20 interview on CNBC, telling the network that Tesla would probably only operate 10 autonomous vehicles the first week. But that number will rise to perhaps 1,000 'within a few months', Mr Musk told CNBC. 'And then we will expand to other cities.... San Francisco, Los Angeles, San Antonio.' The service will be offered from 6am until midnight and will be available to 'early access' users on an invitation-only basis in a geo-fenced area, Tesla owner Sawyer Merritt said on June 20 on Mr Musk's X platform, adding that Tesla had given him permission to release the information. Mr Musk last fall unveiled the Cybercab, which has no steering wheel or pedals. But production is not expected to begin on the vehicle until 2026. Tesla's robotaxi launch comes well after Waymo's offering of commercial robotaxi service, with more US cities gradually added. The US National Highway Traffic Safety Administration (NHTSA) in October 2024 opened a probe into Tesla's Full Self-Driving software after receiving four reports of crashes. The NHTSA on May 8 asked Tesla for additional information on its technology in light of the Austin launch. But the NHTSA does not 'pre-approve' new technologies, the agency told AFP. 'Rather, manufacturers certify that each vehicle meets NHTSA's rigorous safety standards, and the agency investigates incidents involving potential safety defects,' the NHTSA said. AFP Join ST's Telegram channel and get the latest breaking news delivered to you.
