RM183bil capital expenditure for M'sian oil and gas sector




Goodwill gesture: Offshore Technology Conference  board of directors
representative Dr Arnis Judzis
(left) presenting a memento to Petronas president/CEO Tan Sri Shamsul Azhar Abbas.

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) and the local industry are expected to invest US$59bil (RM183bil) in capital expenditure (capex) over the next five years, positioning Malaysia as a regional hub for oil and gas.

“The capex for Petronas and its production sharing contract (PSC) operators will be US$59bil in the next five years.

“It (capex) has never been this high. Petronas' capex is about 70% of the amount and the bulk of it will be for exploration and production,” Petronas executive vice-president (exploration and production business) Datuk Wee Yiaw Hin told StarBiz.

He said Petronas would be looking at maintaining and even growing its production in oil and gas.
“In order to do that, Petronas has outlined three strong strategies with the first being trying to get more out of our existing production area. We are looking into enhanced oil recovery (EOR). We are trying to get more from our existing production so there's a lot of activity there,” Wee said, adding that Petronas had earlier signed a PSC with Shell Malaysia for EOR projects offshore Sarawak and Sabah.

In January, Petronas and Shell Malaysia signed a 30-year deal worth RM37.3bil. The deal will see the implementation of the world's largest EOR projects offshore Sabah and Sarawak.

According to reports, EOR currently accounts for 4% of global oil production. This could rise to 20% by 2030.

Secondly, Wee said Petronas had a lot of what it called “stranded fields”. “We have come to a stage where we will be applying more innovative contracting solution like the marginal oilfields.”

“And lastly, we are trying to add resources to our resource base. There are a lot of aggressive explorations even in new areas such as high pressure, high temperature and deepwater,” Wee said.

Five years ago, Petronas had 10-12 rigs a year. Today, it has some 35 rigs in Malaysian waters alone. In addition, the national oil company has 90 barges and boats in operation.

“This is going to continue for the next few years to grow our production. With that, the industry will have to support us in going into new technology areas. When we talk about EOR deepwater projects, these are all very technological focused,” Wee said.

Meanwhile, he said Gumusut-Kakap, which was a deepwater oilfield, was scheduled to start production either end-2013 or early 2014.

“When it comes on stream, it will produce 120,000 to 150,000 barrels per day. It is a big production as our Malaysia production is 600,000 barrels per day,” Wee said.

Petronas shut down its production in Sudan in February due to geopolitical problems in the country. The national oil company is estimated to lose US$1bil due to the halted production.

Wee said Petronas was expected to start producing there again probably by mid-2013.

Meanwhile, Wee also announced the inaugural Offshore Technology Conference (OTC) Asia which would kick off from March 25-28, 2014 in Kuala Lumpur.

“The time is right for OTC to be here. Malaysia is aspiring to be the leading hub in oil and gas. But I think we can grow to be a regional hub as well.”

Wee said a conference like OTC would provide a platform for the industry to exchange knowledge, technology and expertise.

Offshore Technology Conference (OTC) board of directors representative and OTC Asia event oversight committee member Dr Arnis Judzis said OTC could bring economic benefits to the community and the area.

He said the OTC held in Houston had many exhibitors and high level of activities.

“Today, the investment in hotel activities and trade has brought over US$2.3bil to the community as a result of the incoming people, attendees, goods and services.

“We see a similar level of activities in Kuala Lumpur. And as OTC matures over the years, more and more participants will come in,” Judzis said.

The OTC Asia is expected to attract 10,000 visitors with over 6,000 sq m of exhibits. OTC Houston last year drew 79,000 visitors. It had 75,000 sq ft exhibit space with 200 exhibitors representing 110 countries.

“OTC has always attracted a large attendance from the Asia-Pacific region. Participation from Asia-Pacific countries at the 2012 OTC in Houston was more than 4,100 people,” Judzis said.

OTC Asia project director Cordella Wong Gillett said OTC Asia would be a biannual event and 2016 had also been committed to be held in Kuala Lumpur.

Petronas president and chief executive officer Tan Sri Shamsul Azhar Abbas said the next couple of years were set to be a period of prolonged economic and financial market uncertainty but he believed energy requirements would continue to see an uptrend.

“As Malaysia continues to position itself as a regional hub for oil and gas services, we fully realise the value of participating in technological exchanges such as the OTC.

“The OTC series will undoubtedly provide significant platforms for industry captains to congregate and collectively identify avenues to propel the oil and gas industry to greater heights, amid the increasing volatilities facing the sector,” Shamsul said in his speech at an industry reception of OTC Asia 2014.