Petronas forecasts more uncertainty for oil & gas as energy transition takes shape

Malaysia’s state-owned Petronas is anticipating further uncertainty for the oil and gas business as the energy transition sets new challenges and spreads over the sector.

In its annual Petronas Activity Outlook (PAO) for 2022-2024, which was released on Tuesday, Petronas offered insights into industry trends, demand outlook and the firm’s upcoming activities.

The company anticipates the path towards sustained demand recovery to remain fragile and uncertain in 2022, as the oil market adjusts to both short and long-term landscapes, driven by the resumption of economic activities amidst the Covid-19 pandemic.

Freida Amat, Petronas’ Vice President of Group Procurement, remarked: “While accelerated energy transition will create further challenges to the traditional oil and gas business, industry players must be innovative and remain cost-competitive to ensure projects and production remain feasible in the uncertain economic climate for the sustainability of the industry.”

Furthermore, the firm foresees a positive outlook for drilling rigs activity and a steady outlook for fabrication of fixed structures and subsea facilities, supply of linepipes, underwater services, as well as decommissioning activities. However, Petronas expects a modest outlook for the installation of floatover barges.

The company also shares insights, which are expected to have a positive impact on the industry. Among these insights, Petronas is pushing further for the usage of cleaner energy in pursuit of a lower carbon profile as it ventures into the hydrogen business, presenting new opportunities for oil and gas services and equipment (OGSE) industry players.

In addition, Petronas Ventures, as the firm’s venture capital arm, will continue to drive technology innovation and maintain a competitive edge to support its core oil and gas business for further growth.

According to Petronas, efficiency as an enabler in pursuit of maximising assets is key to continuous improvement to operations and the highest degree of efficiency in project delivery practices enables better project outlook, creates value for the industry and maintains its competitive advantage and sustainability.

Meanwhile, Petronas made an announcement on Wednesday to refute claims of collaboration in reference to the statement made by Serba Dinamik’s legal team as cited in a news report titled “Serba Dinamik CEO charged over alleged false statement on company affairs” by Free Malaysia Today, dated 29 December 2021, which – among other things – states that “Serba Dinamik and Petronas will be bringing in investment to the tune of RM33.9 billion”.

Petronas firmly denied any form of collaboration with Serba Dinamik to jointly attract investors for any projects at the Expo 2020 Dubai and added that there was no other collaboration to jointly attract investors using other platforms.

When it comes to the company’s recent activities, projects and agreements, it is worth reminding that Petronas and Posco joined forces earlier this month to collaborate on evaluating and exploring carbon capture and storage (CCS) potential in Malaysia, which would contribute to turning the country into a CCS solutions hub.

Petronas says it is taking deliberate steps to build a resilient and sustainable portfolio to support the transition towards lower-carbon energy sources, including evaluating the application of technology towards lowering emissions across the value chain, which will encompass carbon capture, transport and storage.

The company’s efforts to build a resilient and sustainable portfolio include developing, testing, and piloting a suite of technologies at its first offshore CCS project set for CO2 injection in 2025. Additionally, Petronas is pursuing more zero continuous flaring and venting of hydrocarbons to reduce emissions aligned with its aspiration to achieve net-zero carbon emissions by 2050.