KUALA LUMPUR (March 1): Local oil and gas services and equipment (OGSE) providers will benefit from the surge in oil prices if they manage their capital base and cost efficiencies well, Petroliam Nasional Bhd (Petronas) president and group chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz said on Tuesday (March 1).
Speaking at a media briefing, Muhammad Taufik said despite the high price of oil, Petronas will continue to pursue cost management so it can remain profitable at the US$40-50 per barrel range.
He added that Petronas is not planning “any immediate rate negotiations” with service providers, as it still needs to see how the market pans out.
However, Petronas remains committed as a responsible partner to playing its role as a catalyst to advance the oil and gas sector, he said.
"We will continue to respect the commercial availability of assets [sic] and pay market rates. We want to be responsible in partnering the OGSE sector.
“I will not deny it, there has been a departure on where producers are and where service providers are... Really the answer is how they manage their capital base and cost efficiencies," Muhammad Taufik said.
“Some OGSE players may find themselves taking on assets with high leverage and buying them at the wrong point in the cycle.
“However, they have the ability to restructure that as the market returns. [But] it is also unfortunate that there is this single job mentality with certain OGSE players.
"You need scale, depth and expertise to weather downturns in a cyclical business, and these cycles are getting shorter and shorter," he added.
On global oil price outlook, Muhammad Taufik said the US$100-per-barrel oil price does not reflect market fundamentals, which he opined should be at around US$70-US$80 range at this point in time.
He pointed out that as global economies begin to recover post-Covid-19, demand for energy would pick up in tandem, and demand for OGSE services would also be expected to follow.
“We will continue to [have] open tenders and we will drive towards operational excellence.”
Petronas on Tuesday said it posted a profit of RM13.35 billion for the fourth quarter ended Dec 31, 2021 (4QFY21) against losses of RM1.14 billion a year ago, on the back of an improved performance in the upstream, natural gas and new energy segments.
The improvements more than offset higher product losses and wider losses in the downstream segment due to higher impairment loss on assets.