Petronas sees RM20bil annual capex for upstream

PETALING JAYA: Petroliam Nasional Bhd (Petronas) is allocating an average of RM20bil for capital expenditure (capex) annually in upstream activities between 2022 and 2027, says executive vice-president and chief executive officer, upstream, Adif Zulkifli.

In an exclusive interview recently, Adif said the capex allocation was at a healthy level to grow slightly its production in the next five years.

“We hope that we are able to generate (a healthy) cash flow from the production that we have. The production will be mainly from gas. We already have a couple of projects in the pipeline (domestically).

“Internationally, we are also ramping up projects in Canada and Argentina,” he explained, adding that around 40% of the capex would be spent for international upstream activities.

Petronas’ total daily production average as of the second quarter of 2021 was 2.345 million barrels of oil equivalent per day.

The national oil company is projecting a year-on-year production incremental of between 1% and 5% in the next five years, to be contributed by both of its domestic and international operations.

For 2021 alone, the national oil company is looking to spend between RM16bil and RM17bil for upstream activities. Established in 1974, Petronas now has a presence in more than 50 countries.

On the recent upswing in oil prices, Adif said this was due to the gradual reopening of the economy post-Covid-19 pandemic but this would be temporary and oil prices would moderate, especially after supply catches up with demand.

“The reality is there is a lot of supply (capacity especially among the Organisation of the Petroleum Exporting Countries or Opec countries). The reason why (oil) prices are high is because Opec is able to control supply and will slowly release more over time. At a certain price, we think there will be even more supply (especially coming from the North American shale oil producers).

“We don’t think oil prices will reach beyond US$100 (RM417) per barrel. We believe prices will be between US$50 (RM209) and US$60 (RM250) per barrel moving forward,” he added. At the time of writing, Brent crude rose 1.2% to US$85.88 (RM358.25). ― Bernama

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