Current capacity enough to meed medium-term O&G demand: Petronas

By Ayisy Yusof - March 24, 2021 @ 10:17am

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) says there will be enough production capacity currently to meet oil and gas (O&G) demand in the medium term.

This was despite a significant cut in the industry's capital expenditure (capex) for the upstream segment, as demand was still weak compared to pre-crisis levels, Petronas president and group chief executive officer Tengku Muhammad Taufik Tengku Aziz said.

Tengku Taufik noted that industry capex for upstream activities had fallen below US$400 billion last year.

"During the height of the pandemic last year, close to four billion people were under movement restriction, reducing global oil demand to 91 million barrel per day (bpd). This was a full eight million bpd lower than 2019," he said virtually at the 13th edition of the International Petroleum Technology Conference (IPTC) 2021 here today.

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Tengku Taufik said many still suspected that oil demand was unlikely to return to 2019 levels soon in spite of the recent observable modest recovery.

"This is due to uncertainty around the pace and scale of recovery, continued restrictions around travel by road and air, and rising efficiency and electrification of the transportation sector," he said.

The national oil company said the future of O&G industry would still be heavily shaped by the unprecedented events of 2020, despite the pace of vaccine deployment globally.

Tengku Taufik said the energy transition to cleaner and more sustainable sources continued at an accelerated pace to address climate change and coupled with the staggering momentum of technological advancements.

However, he acknowledged that O&G would still continue to make up a significant portion of the energy mix, although its share would likely decline from 54 per cent in 2018 to around 47 per cent by 2040.

"Renewable energy alone will not be able to meet growing energy demand amidst growing populations and economic expansion, which we expect to see post-recovery, particularly in Asia," he said, adding that gas continues to be a vital part of the energy mix."

Petronas, he said, remained optimistic about strong potential in O&G.

"We currently have 13 blocks on offer in the recently launched Malaysia Bid Round 2021. The bid round incorporates innovative block offerings, flexible bidding options, a two-phased exploration period as well as data access and transparency.

"With more than 20 billion barrels of oil equivalent yet to be discovered, Malaysia presents a sizable runway of potential reserves," he added.

Mubadala Petroleum chief executive officer Mansoor Mohamed Al Hamed said more than two-thirds of the company's resources portfolio was gas.

"We believe gas will continue to play an important role in the energy-mix for the long-term as a lower carbon fuel source and a bridge to renewables," he said.

The upstream O&G company manages asset and operations in 10 countries with the primary focus on the Middle East, North Africa, Russia and Southeast Asia (SEA).

"We remain committed to our operations in SEA, which are strategic and high-value projects with promising exploration. We operate the majority of our assets across Thailand, Indonesia and Malaysia, where we have established over the last decade a strong track record," he said.

Schlumberger chief executive officer Olivier Le Peuch said decarbonisation of the industry was a unique opportunity across the value chain.

"Innovation and technology will improve the industry's performance through collaborative towards low-cost and low carbon as well as in energy mix," he added.