Petronas president and CEO Datuk Wan Zulkiflee Wan Ariffin said: "Tough times are here to stay."
KUALA LUMPUR: Malaysia’s state-owned oil company is banking on the Americas to help raise reserves and maintain production rates as wells in its Southeast Asian home market continue their natural declines.
Petroliam Nasional Bhd will allocate a larger share of its future capital expenditure toward projects stretching from Canada to Brazil as oil prices recover from the 2014 crash and as the company completes a $27 billion refinery and petrochemicals project at home, Chief Executive Officer Tan Sri Wan Zulkiflee Wan Ariffin said.
Petronas last week agreed to buy stakes in two offshore fields in Brazil, further expanding its Americas portfolio.
“There is a lot of new opportunity for us in that part of the world,” Wan Zulkiflee said in an interview Friday on the 83rd floor of the Petronas Towers in Kuala Lumpur, adding that the shifting focus doesn’t mean the company is leaving its home country. Petronas still has “many more projects lined up” in Malaysia, including plans to boost spending on renewable energy, he said.
Petronas typically allocates 45 billion ringgit ($10.9 billion) to 55 billion ringgit on capital expenditure every year and upstream projects will have “a bigger chunk” of that going forward, Wan Zulkiflee said. One of those to get a slice of the spending boost will be a liquefied natural gas export venture in western Canada with Royal Dutch Shell Plc.
Drilling Boost
Petronas last year agreed to buy a 25 percent stake in the C$40 billion LNG Canada project. Construction costs will increase over the next few years and Petronas will need to boost spending on gas drilling, Wan Zulkiflee said.
The company also plans to invest $2.3 billion over four years in Argentina’s Vaca Muerta shale oil fields with state-controlled YPF SA, and has interests in 10 offshore blocks in Mexico. Drilling in Mexico will begin in the third quarter.
The purchase of stakes in Brazilian oil fields from Petroleo Brasileiro SA for $1.29 billion will bring commitments for more spending as the companies drill to boost production, Wan Zulkiflee said. Still, more spending doesn’t mean more borrowing. The company has no plans to tap the bond market and is cash-rich, he said.
Petronas had 172.5 billion ringgit of cash and cash equivalents as at Dec. 31, according to its latest financial statement.
Petronas is also looking to build up its renewable business. The company made its first foray into cleaner energy this month after agreeing to buy Amplus Energy Solutions Pte from I Squared Capital, amassing 500 megawatts of solar power in operation or under development.
Petronas plans to set aside as much as 5 percent of its annual capex toward this segment and will be looking at further opportunities in Malaysia, focusing on solar and wind, Wan Zulkiflee said. - Bloomberg
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