Friday 29 Mar 2024
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This article first appeared in The Edge Financial Daily, on August 23, 2016.

 

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) is conducting a study on “playing a more effective role” to ensure the resiliency of local service providers as the oil and gas (O&G) industry is battling prolonged depressed crude prices.

While he did not elaborate on what the ongoing study entails, Petronas president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin revealed that it is for making “the whole industry more competitive and resilient after this whole episode”. However, he reiterates that there would not be any financial assistance to ailing service providers.

The concerns over the viability of service providers mounted when Singapore’s Swiber Holdings Ltd filed for liquidation late last month. 

Although it later retracted the application, its inability to pay off debts had dented some banks’ earnings in the island republic.

Wan Zulkiflee reiterated 

Petronas’ stance on the need for some of the sub-sectors in O&G to consolidate. “A lot more can be done to get the whole industry more resilient going forward.”

After presenting the second quarter’s earnings, Wan Zulkiflee warned that the O&G industry has not gotten out of the slump with the recent rally in oil prices.

In his speech, Wan Zulkiflee said it “remains to be uncertain” how Petronas will combat the next phases of this era of depressed crude oil prices.

The year-to-date average price for Brent crude was US$40.30 (RM162.41) a barrel, which was still lower than the whole of 2015’s US$52 average.

“The continuous volatility of oil prices mean that we cannot let up but instead, continue to grow on the back of better operational efficiencies, more controllable opex  (operational expenditure)reduction, while adopting a cost-conscious and efficiency-focused mindset,” he said.

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