KUALA LUMPUR (Aug 30): Petroliam Nasional Bhd (Petronas) said it is renegotiating contracts with its suppliers and contractors given the current high crude oil prices.
"When oil prices are in triple digits, there will be renegotiations,” said its president and group chief executive officer Datuk Tengku Muhammad Taufik. “We are looking at contract strategy, and access to finance, and we will always take into account the market we are competing with.”
In the long term, the national oil and gas company wants to ensure that contract terms are fairly shared between the group and suppliers and contractors, Muhammad Taufik said at a press conference in conjunction with the announcement of Petronas' 1HFY22 results on Tuesday (Aug 30).
"We want to ensure over the long term the terms are shared equitably to make sure that we can continue [to renegotiate] over cycles. If we are going to work in partnership, we are going to have to go through cycles because [oil prices] are not going to be above US$100 forever. More needs to be discussed [with them].
Muhammad Taufik did not specify when Petronas will complete the renegotiations. "Different discussions have their own timeframe."
Speaking at the same press conference, Petronas executive vice president and CEO for upstream Datuk Adif Zulkifli said its drilling segment rate is up about 200% on a daily basis.
"Steel is up 30% to 40%. Even for offshore vessels, new bids are coming in at much higher prices. There is a huge shortage in installation vessels right now. All the bids are coming in at much higher prices than we expected. This is putting a lot of pressure on our projects right now.
"Even if oil prices are above US$100, we have got to take a long-term view," Adif added.