KUALA LUMPUR: Oil and gas (O&G) players should look at consolidating, reducing costs and investing in new technologies to sustain their business in the lower oil price environment, said GE Oil & Gas Asia Pacific president Visal Leng.
He said players in the sector would continue to see more consolidation amid oil prices stabilising between US$50 and US$60 per barrel, as companies need strong balance sheets to operate in the new environment.
“Industry players are grappling with the same challenges, mainly in ensuring that producing at US$60 per barrel is a viable option,” he told reporters on the sidelines of the two-day 19th Asia Oil and Gas Conference which ended here yesterday.
Leng said more companies and providers in the industry had been collaborating and investing in technology to reduce operational costs, while adapting to consolidation and mergers.
He said that this was due to the declining oil prices by over 70% in the last two years, leaving many companies to operate in the red.
“This is the right time for industry player to invest in technology to balance between investment and returns.
“We need to adopt a long term view by not only gauging a project based on the capital expenditure required now, but also on the operating expenses saved over its life cycle,” he said.
Meanwhile, Leng said the company had partnered Petroliam Nasional Bhd (Petronas) to reduce maintenance requirements, saving the latter some US$100mil (RM435.05mil) in costs, as part of the total RM5 billion saved from the industry-wide Cost Reduction Alliance 2.0 programme.
Oil prices fell to US$49.37 per barrel yesterday from US$49.60 per barrel previously, on concerns over slowing demand. – Bernama