Petronas president and group CEO Tan Sri Tengku Muhammad Taufik Tengku Aziz.
KUALA LUMPUR: Discussions over Sarawak’s gas distribution, which has been taken over by Petroliam Sarawak Bhd (Petros), continues between the state government and Petroliam Nasional Bhd (PETRONAS) although Tan Sri Tengku Muhammad Taufik, the national oil company’s president and group chief executive officer, declined to reveal details.
Acknowledging the “constraints” in the discussions, he stressed that all existing agreements and contracts remain in full force.
“We are in effect. What remains certain is by our conduct despite the reports or speculations, we remain strategic partners as well, I think I’ve explained our position quite clearly here,” Tengku Muhammad Taufik said.
“Both parties recognise that each has aspirations and duties and it is in that spirit that conversations are happening now.
“We want to continue being a part of the equation,” he said in response to coverage of the discussions during the media briefing on PETRONAS’ first-half 2024 financial results.
Tengku Muhammad Taufik also cleared misconceptions over the discussions, which have been conducted in a spirit of understanding each party’s position.
He said both remain strategic partners in the development of hydrocarbon resources in the state, stressing that PETRONAS was set up under the Petroleum Development Act (PDA) 1974 to have ownership and exclusive rights to explore, manage and develop petroleum resources for the Malaysian federation.
Under the PDA, PETRONAS has an obligation to maximise the country’s hydrocarbon resources, with the profits contributed back to the nation.
“We have upheld this mandate in the past 50 years and in doing so, as you have seen, it’s not that the money is spent anywhere else, the lion’s share is going back to the nation,” Tengku Muhammad Taufik said, adding that Sarawak has also benefitted in terms of revenue, human capital development (over 90% of employees in Sarawak operations are from the state) and the development of Bintulu as the state’s oil and gas hub.
To-date, PETRONAS has injected RM1.4 trillion into the nation’s economy through dividends, taxes and cash payments.
On the matter of China’s demand that Malaysia immediately stop all exploration and development activities in waters offshore Sarawak claimed by China under its so-called 10-dash line, he said PETRONAS is guided by a 1979 map showing that the area under dispute is Malaysia’s and that it has conducted all activities lawfully.
He added that Prime Minister Datuk Seri Anwar Ibrahim believes Malaysia’s ability to conduct exploration within its sovereign waters is “uncontested”. The demand was sent in a diplomatic letter to Malaysia’s embassy in Beijing last week.
Tengku Muhammad Taufik said PETRONAS will continue to strengthen collaboration with partners at home and abroad and at the same time, accelerate the adoption of technologies and the execution of its energy transition strategy to pave the way for future growth, all of which underpins the focus on ensuring energy security, fostering collaborations with stakeholders to safeguard the nation’s interest and supporting nation-building efforts.
For the first-half of 2024, PETRONAS posted RM171.7bil in revenue compared with RM169bil in the corresponding period of 2023 on the impact from a stronger US dollar.
Net profit fell 19% to RM32.4bil due to the deconsolidation of subsidiaries and higher taxation during the first six months of this year.
Tengku Muhammad Taufik estimates crude oil price to be around the US$70 to US$80 band unless China’s economy slows down further.
According to the International Energy Agency, China will account for 40% of 2024 and 2025 global oil demand gains, down from 70% in global oil demand gains in 2023.
PETRONAS’ upstream business recorded an average total daily production of 2.48 million barrels of oil equivalent (boe) per day in the period under review for some of its activities, higher than the 2.43 million boe per day recorded for the same period in 2023, mainly due to higher natural gas production within and outside Malaysia.
As part of its expansion, PETRONAS’ Indonesian operations were extended through a 20-year extension for the Ketapang production sharing contract and a multi-year contract for the Bobara working area, while acquiring a 50% share of the Papua New Guinea Petroleum prospecting licence.
Downstream operations remained stable, with overall equipment effectiveness of 88.7% comparable with 89% recorded in the corresponding period of last year.
However, PETRONAS recorded overall marketing sales volume of 12.35 billion litres, a decrease from 12.81 billion litres in the first-half of last year, which was due to the divestment of stakes in Engen Limited.
Tengku Muhammad Taufik said PETRONAS’ performance for the first-half was commendable and is a testimony to its commitment to prudent financial management and the strength of its diverse portfolio amid continue market volatility and global economic slowdown.
He expects the operating landscape for the second-half of the year to be dominated by geopolitics, macroeconomic and energy transition complexities.
“PETRONAS is steadfast in pushing on all fronts across our integrated business with a clear strategy and firm capital discipline, anchored on our purpose as a progressive energy and solutions partner to all the societies we serve,” he said in closing remarks to the briefing.
