PETALING JAYA: Petroliam Nasional Bhd (Petronas) will remain prudent in the “lower for longer” environment, as reflected in its activity level, with its oil price outlook hovering around the US$50 to US$60 per barrel level.
“At the time this report is published, oil prices have strengthened to above US$60 per barrel, driven by escalating tension in the Middle East. In the short term, crude oil prices are expected to remain volatile as traders may take position to capture opportunities from gyration of oil prices. Any geopolitical events can also push up oil prices as the market is still rebalancing,” Petronas vice-president of group procurement Samsudin Miskon said in the Petronas Activity Outlook report for 2018-2020.
In terms of project portfolio, Petronas said an average of 1.7Mboe/d production is forecasted over the next five years and upstream Malaysia has a robust pipeline of potential projects focused on developing greenfield projects and maximising ultimate recovery of brownfield projects.
“Petronas and its PACs will continue to mature potential development projects technically and commercially, within its portfolio to sustain the desired production level,” it said.
The projection of development portfolios for greenfield is about 20 projects with about 30% of these projects being oil projects, all with new facilities development.
For brownfield, Petronas expects about 30 projects with about 75% of these projects being oil projects. Some 10% of these involve new facilities development. These projections are based on when a specific activity begins, and not by contract award.
If oil price recovers for a sustainable period, Petronas expects a higher number of greenfield and brownfield projects to become commercially viable, provided that cost is kept at a competitive level. Activities for the oil and gas services and equipment sector may increase accordingly.
In terms of downstream, Petronas has a medium term (post 2020) positive outlook with expectations of a substantial increase in turnaround activity to cater for Pengerang Integrated Complex (PIC) due to the large size of its operations.
“PIC project is scheduled to come online by 2019, and turnaround activities will kickstart around 2022 onwards. It is a good opportunity for collaboration between industry players and foreign participation in building local capability,” it said.
Due to the size of the complex, Petronas expects activities to double once operation commences. It is estimated that in the next five to 10 years, the complex itself will spur new urban development with spin-off activities benefitting especially the local communities.
According to Samsudin, Petronas will continue to drive down cost and improve efficiency through CACTUS and CORAL 2.0, embracing digitalisation and industry collaboration while economies of scale is now the way to go, via integrated work scopes and longer contracting tenures.
In terms of technology, senior vice-president of project delivery and technology Mazuin Ismail said it is the key to unlock value and deliver sustainable solutions for the industry, in order to thrive in the challenging environment.
According to the report, robotics and drones utilisation will increase significantly in due time while data analytics supported by predictive maintenance will exponentially increase plant reliability, leading to less repair and maintenance requirements. These elements combined, may result in fewer contract opportunities.
Petronas also promotes collaboration with external parties by calling for proposals from external parties via its online crowdsourcing platform, Innovation Gateway@Petronas (IG@P).
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