KUALA LUMPUR (Dec 28): Petroliam Nasional Bhd (Petronas) said on Tuesday (Dec 28) it expects a positive outlook for 2022 to 2024 for the national oil company on a recovery in crude oil prices, as well as relaxation of Covid-19 standard operating procedures (SOPs) and directives besides an increase in plug and abandonment projects for planned retirement of oil and gas wells.
Petronas said the information in its latest activity outlook report, which covers 2022 to 2024, is accounted for when a specific activity begins and not by contract award.
"The outlook for 2022 to 2024 is based on full-year utilisation. Actual numbers may vary based on campaign durations and/or optimisation, project deferment and cancellation, etc. Actual numbers are based on data as at October 2021.
"This report was developed based on currently available information from internal and external sources."
Petronas believes that the expectations of its management as reflected by such forward-looking statements are reasonable based on information currently available to it.
"The report provides information on activities within a three-year period from 2022 to 2024,” Petronas said.
According to the national oil company, as the world reopens and economic activities resume, the global economy is staging its most robust post-recession rebound with a speedy recovery seen across countries and sectors due to progress in vaccination against Covid-19.
Petronas said the pervasive roll-out of Covid-19 vaccines in 2021 provided support to the recovery of road transport fuel demand amid pent-up travelling demand.
"However, the aviation sector is only expected to return to pre-pandemic levels by 2024. The path towards sustained oil demand recovery remains fragile and uncertain due to the emergence of new Covid-19 variants that have triggered fresh waves of lockdowns.
"While most industry players are optimistic about the economic recovery, they still remain cautious. Thus, the smarter approach would be to strengthen efforts collectively and be ready to face oil price volatility,” Petronas said.
According to news reports, crude oil prices have risen around 50% this year to about US$80 (about RM334.68) a barrel, supported by recovering demand and supply cuts by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+.
It was reported on Tuesday that Brent crude had risen seven cents, or 0.1%, to US$78.67 a barrel by 0115 GMT, while US West Texas Intermediate crude was up 18 cents, or 0.2%, to US$75.75 a barrel, Reuters reported.
Petronas, which sees crude oil prices at US$50 to US$60 a barrel between 2022 and 2024, said in the activity outlook report that the company remains prudent and will continue to adopt a lower-for-longer approach for its crude oil price expectations until the firm is confident that the current price uptrend is sustainable.
"Most industry analysts like research houses and banks publicly share this (US$50 to US$60 crude oil price) expectation. Companies may take a conservative approach in their assumptions.
"If oil prices recover for a sustainable period, we expect a higher number of greenfield and brownfield projects to become commercially viable, provided that we keep the cost at a competitive level. Thus, activities for the OGSE (oil and gas services and equipment) sector may increase accordingly,” Petronas added.