KUALA LUMPUR: Capital expenditure (capex) requirements for oil and gas (O&G) players are poised to rise substantially as pressure builds on the industry to adopt more sustainable practices, says Malaysian Petroleum Resources Corp operations head Mustafa Akbar Reza.
He said the O&G industry could ill-afford to just pay lip service with regards to this matter since the push-pull dynamics are very strong for them to adopt sustainable practices in their projects.
“Right now, lip service doesn’t work anymore but it will be a serious action because in every industry, everyone is creating this need – even users and investors – not to harm the environment and this becomes almost like a social licence to operate.
“If investors deem you as non-compliant, they won’t invest in you. And if you are non-compliant, it is very tough to try to gain access to financing,” Mustafa said.
He said this at a briefing at the Oil and Gas Asia 2022, the Malaysia Oil & Gas Services Exhibition and Conference and Petrochemicals Sustainability Conference.
“Everyone is jumping and toeing the line to support this whole environmental, social and governance agenda, which transcends beyond the O&G industry.
“So you cannot just think of your profit and loss without addressing all the elements of sustainability,” he added.
Citing data from Rystad Energy, Mustafa said there are about US$9bil (RM40.56bil) worth of development projects in the pipeline in Sabah and Sarawak alone.
Three of these projects – the Lang Lebah, B14 and Kasawari – have been identified with carbon capture, utilisation and storage potential.
Mustafa said there is potential for the oil and gas services and equipment (OGSE) companies to benefit from the higher capex spending by O&G operators.
“OGSE companies need to have the skillset to support this rapid change – as the ones that you have now may not be able to do that (sustainable projects).
“But with Petroliam Nasional Bhd (PETRONAS) stating that it is on board for net-zero carbon emissions by 2050, that sends a signal to the OGSE sector to also come on board,” he said.
Mustafa added: “So everyone needs to get themselves ready. If it means to support the energy transition and address climate change, for example, it means you need to take on board technologies that are not known to you and (OGSE companies) have got to be brave enough to take this step.”
Meanwhile, PETRONAS president and group chief executive officer Datuk Tengku Muhammad Taufik said in his keynote address that is was in the national oil company’s interest to ensure a robust and resilient OGSE sector.
“The OGSE sector (will) continue to grow in the long term. In 1993, we introduced a vendor development programme to upskill the capabilities of the local OGSE sector – almost 100 companies that had graduated from this programme have been listed on Bursa Malaysia,” Tengku Muhammad said.
“PETRONAS remains committed to working with our OGSE partners and this becomes even more important as the industry accelerates its efforts to decarbonise its operations as part of the wider energy transition.”
He said PETRONAS is of the view that such a transition must be executed responsibly and sustainably.
“It will (mean) we will apply low-carbon technology strategically and systematically.
“We have consistently conveyed that it is absolutely critical for our OGSE players to pursue innovation, so they can ultimately be as competitive as global players in the course of doing their business,” Tengku Muhammad said.
“This would ensure the projects we collectively pursue remains feasible despite the cyclical swings in the energy market.
“O&G can still be an energy solution if it is delivered safely, responsibly and in a cost-optimised and emissions-abated (manner),” he added.