Petronas to keep oil, gas focus for next decade

  • Market: Natural gas, Oil products
  • 09/14/22

Oil and gas remains the main focus for Malaysia's state-owned oil firm Petronas for the next decade, even as it explores the alternative energy sphere.

Gentari, the firm's latest clean energy subsidiary, was set up as a separate entity to keep the core business "lean, mean and generating as much (profit) as possible," said Petronas' vice president of exploration and upstream, Mohd Redhani bin Abdul Rahman.

"Renewable and sustainable energy is not our forte. It's not something we've been doing for the last forty years," Redhani said, adding that the guiding principles and business models for renewable energy are not compatible with how Petronas runs its oil and gas business.

"If you try to make an alternative energy project compete against an oil and gas project, it will not see the light of day," said Redhani.

"We do this because we want to ensure as a business entity, we have longevity as we go towards a carbon-neutral world."

Petronas' core oil and gas business operations will continue to ramp up in the next 5-10 years, notwithstanding the recent volatility in oil prices, he said.

Gentari was introduced in June this year as part of the firm's plans to look into hydrogen, solar energy and green mobility solutions as sources of low-carbon energy. The firm aims to achieve net-zero emissions by 2050. In its 10-year blueprint for the oil and gas sector unveiled in 2021, Petronas aimed to set aside 3.6bn-4bn ringgit/yr ($795mn-883mn/yr), or 9pc of its 40bn-45bn ringgit/yr capital expenditure (capex), over the following five years for renewable energy.

Petronas will "do as much as possible" to maintain production at around 2mn b/d of oil equivalent in the next 10 years, said Redhani, adding that between 20 and 25 exploration wells and about 140 brownfield projects are in the pipeline in the next 2-5 years.

Petronas' profits surged in the first half of this year on the back of increasing oil and gas prices resulting from a widening global supply gap. Its capex over January-June amounted to 18.9bn ringgit, mainly because of upstream projects.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
02/28/24

Australia’s Strike considers Walyering gas boost

Australia’s Strike considers Walyering gas boost

Sydney, 28 February (Argus) — Australian independent Strike Energy aims to increase output at its Walyering project in Western Australia (WA) state well beyond its present nameplate capacity, while carrying out a review of its South Erregulla field following disappointing test results. Walyering's production exceeded the plant's nameplate capacity this month but problems with its South Erregulla development are unlikely to be resolved in the current 2023-24 fiscal year, Strike said in its half-year financial results to 31 December. The 33 TJ/d (880,000 m³/d) Walyering plant produced 34 TJ/d on 6 February, with the firm aiming to move it to a partially unmanned operation by 30 June, as part of a cost out intended to save A$1.5mn ($980,000) across all operations. Chief executive Stuart Nicholls said Strike was reviewing its safety case at Walyering given the prospectivity of Walyering-7 appraisal well to be drilled in July-September and the potential for Walyering-5 and 6 wells to further increase upstream capacity beyond the facility's current nameplate. "We're looking at potentially taking the facility on a low to no cost basis by reviewing our safety case, which will take some months, but to take the capacity of the facility to beyond 40 TJ/d," Nicholls said on 28 February. Strike said following the failed flow testing at South Erregulla-3 and South Erregulla-2 a reserves and resources review will be completed by 30 June, with development options to be studied for maximising value of discovered and tested gas. Results so far made development of the western side of the field "quite challenging", Nicholls said, with Strike focused on reserves at the South Erregulla-1 discovery well that flowed at 80mn ft³/d (2.2mn m³/d). Average gas sales for July-December were previously reported at [20 TJ/d](https://direct.argusmedia.com/newsandanalysis/article/2532366] but have increased since to average 26 TJ/d during February, Strike said. The gas firm's production costs were A$0.51/GJ for the half-year with an average spot gas price for the period above A$9/GJ, the highest recorded for WA since 2010. Strike said it would target bringing up to four sources of gas on line by 2026, with the outcome of the state government's review of its domestic gas supply mandate possibly leading to access to LNG sales for onshore projects, which would make investment in the Perth basin more attractive. The review follows concerns the exit of coal-fired power generation from WA's main grid in the early 2030s is likely to substantially worsen the expected gas shortfall , as the state turns to gas-fired power plants for electricity. Strike has modelled a 307 TJ/d shortfall by 2033, taking into account the closure of US aluminium producer Alcoa's Kwinana refinery that uses 55 TJ/d, something it said is likely to drive incentives for increased Perth basin production. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

Read More
News

Maersk fuel consumption down on vessel efficiency


02/27/24
News
02/27/24

Maersk fuel consumption down on vessel efficiency

New York, 27 February (Argus) — Maersk's vessels burned about 6.5pc less residual fuel oil and marine gasoil in 2023 than the prior year, which the Danish ship owner attributed to improved vessel fuel efficiencies. Maersk's vessels burned about 9.7mn t of residual fuel oil and marine gasoil in 2023, down from 10.4mn tin 2022, while the company's vessels emitted 34.1mn t of CO2-equivalent emissions last year, down by 1pc from 2022. It reduced its vessels' carbon intensity by 4pc in 2023 compared with a 2020 base line. It aims to reduce it by 50pc by 2030. Some of its customers, including Volvo Cars, Nestle, BESTSELLER, Inditex and Novo Nordisk are moving their cargoes on Maersk vessels powered by low carbon fuels. "While many Maersk customers have shown a willingness to pay a premium to decarbonise their supply chains, rising interest rates threaten to push fuel costs to customer limits", the company cautioned in its sustainability report. Maersk is diverting its vessels from the Red Sea and the Gulf of Aden around the Cape of Good Hope to avoid Yemen's Houthi militants' attacks on shipping. While this will increase its fuel consumption and emissions in 2024, the overall effect depends on the vessels' speed and duration of the Gaza conflict. Maersk has two new methanol-fueled vessels: the 2,100 twenty-foot equivalent unit (TEU) container Laura Maersk delivered in September 2023 and the 16,000 TEU Ane Maersk delivered this month. The bio-methanol that Laura Maersk burns is procured in Rotterdam from Norway's methanol producer Equinor. The bio-methanol is produced from biogas from manure and is International Sustainability Carbon Certification (ISCC) EU certified in accordance with the EU Renewable Energy Directive. Long term, Laura Maersk will be fueled by e-methanol supplied by European Energy's plant in southern Denmark which is expected to come on line by mid-2024. Bio-methanol reduces lifecycle greenhouse gas emissions by 65pc and e-methanol by 70pc, says Maersk. Maersk has another 23 new methanol-fueled vessels on order, 17 of these, with 16,000-17,000 TEU capacity that will be delivered from 2024-2025 and the last six vessels, with 9,000 TEU capacity, from 2026-2027. Maersk had signed a green methanol offtake agreement with Goldwind. Starting in 2026, Goldwind will supply it with 500,000t/year of green methanol from China, which it says will be "enough" for the first 12 of its methanol-capable vessels. In addition to ordering new methanol-enabled vessels, Maersk is also looking into converting an existing 14,000 TEU vessel from a traditional diesel engine to a dual-fuel methanol engine this year. By Stefka Wechsler Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Market participants slam Austrian gas tariff proposal


02/27/24
News
02/27/24

Market participants slam Austrian gas tariff proposal

London, 27 February (Argus) — Market participants are almost universally opposed to Austrian energy regulator E-Control's planned gas tariff methodology changes, which would significantly increase import costs from Germany and Italy. The changes that E-Control aims to introduce from 2025 would shift the reference price methodology to a capacity-weighted distance model from the existing virtual point-based system. This produces indicative 2025 tariffs that triple entry costs from Germany and more than quadruple those from Italy, while increasing entry costs at Baumgarten — where Russian gas enters Austria — by just 31pc. E-Control received 19 replies to its consultation, of which some were joint responses from several companies. While the two Austrian system operators are in favour of the proposed changes , all other respondents are either mostly or entirely against them. Many suggested that E-Control retain the existing methodology, which they say has worked effectively for many years. Several respondents dispute the notion that Baumgarten would no longer be the dominant node of the Austrian system, arguing that moving away from the virtual point-based system is unnecessary. A joint response from five storage operators was particularly critical of the capacity-weighted distance model. The resulting higher tariffs for exit to Austrian storage facilities — which would rise by 184-463pc — could endanger security of supply as "Austria may not be able to make use of its large storage capacities", they said. Further variation and unpredictability in storage tariffs will "lead to a massively negative impact on booking behaviour by storage customers and will endanger the ability to achieve the required filling level on market-based principles", they said. Almost all respondents heavily criticised the significantly higher entry tariffs from Italy and Germany, with many noting that this would create trade barriers that discourage regional trade. Baumgarten will become by far the cheapest import route, running directly counter to Austria's goal to diversify away from Russian gas , respondents said. Many market participants argue that this effect would be compounded by a proposed increase in multipliers for shorter-term products, which they say would strongly discourage trading of locational spreads on a prompt basis and would probably further reduce liquidity. The change to a balanced 50:50 entry-exit revenue split, away from the existing 20:80 split, was also unpopular. This change would significantly increase costs for domestic users, while resulting in lower exit tariffs towards Italy and Germany for companies using Austria as a transit country, respondents said. The 163pc rise in the exit fee to the distribution area means that "the burden sharing is put on domestic household customers and industry while neighbouring countries profit", storage operators said. Several respondents criticised E-Control for failing to review alternative methodologies. OMV made its own calculations for retaining the virtual points-based system, which suggests an 8-24pc increase in entry tariffs and a 41-109pc rise in exit tariffs. This would be more desirable as it would reduce the cost burden for importers and Austrian consumers, OMV said. It would avert an "impending price spiral at entry points" by eliminating the volume risk at Oberkappel, Arnoldstein and Uberackern as far as possible, the Austrian firm said. Other respondents called for a postage stamp methodology — in which uniform tariffs are applied to either entry or exit points — although most advocated for simply retaining the existing system. Several respondents criticised E-Control's forecasts for bookings in the next reference period. These projections must have been based on the assumption of a complete stoppage of Russian imports through Baumgarten, which is in reality "very uncertain", OMV said. There is potential for a downward spiral where falling utilisation of the Austrian system owing to high tariffs leads to the need for even higher tariffs, which then drives down utilisation even further, respondents warned. This could "drive the Austrian gas market into increasing isolation from diversified sources, jeopardising competitiveness, Austria as a business hub and security of supply", OMV said. By Brendan A'Hearn Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Brazil boosts foreign spending in energy transition


02/27/24
News
02/27/24

Brazil boosts foreign spending in energy transition

Sao Paulo, 27 February (Argus) — Brazil's climate fund and green transition plan received multi-billion monetary commitments from multilateral agencies during the G20 meetings, as part of government efforts to boost foreign investment in decarbonization. Brazil estimates that only 6pc of funding for its energy transition projects comes from the private sector, compared with an average of 14pc in other emerging markets and 81pc in developed countries. The high cost of long-term currency hedge contracts has contributed to the limited participation of foreign investors in Brazil's energy transition, the president of the Inter-American Development Bank (IDB) and former president of Brazil's central bank Ilan Goldfajn said. To ease the entry of foreign investments, the government launched the Eco Invest Brasil program, which will create currency hedge mechanisms to limit exposure to exchange-rate volatility. Brazil's finance ministry and central bank developed the program with the World Bank and IDB. The IDB has committed a total of $5.4bn to get the Eco Invest program started, including $3.4bn for currency swaps and $2bn for lines of credit. IDB will also help Brazil prepare and structure projects to receive financing. The plan seeks to remove obstacles for foreigners to invest in Brazil's energy transition by reducing risks related to the volatility of the Brazilian real, according to the treasury secretary Rogerio Ceron. As part of the program, the government plans to issue a presidential decree that will create four new lines of credit within the Climate fund. The goal of the plan is to expand Brazil's integration with the international financial system and boost foreign investment in companies and projects that decarbonize the economy. Brazil's Bndes development bank also reached an agreement with the Glasgow Financial Alliance for Net Zero (GFANZ) to expand financing for Brazilian decarbonization projects. IDB will also provide an additional $2bn line of credit and technical support for Brazil's Climate fund, while the World Bank is considering allocating up to $1bn to the fund. Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.

News

Japan eyes potential of summer power demand: Correction


02/27/24
News
02/27/24

Japan eyes potential of summer power demand: Correction

Corrects nuclear generation forecasts in paragraph 3 Tokyo, 27 February (Argus) — Japan faces potential similar consumption of thermal power generation fuels this summer with nuclear availability and forecast temperatures mostly in line with a year earlier. The Japan Meteorological Agency forecasts a 50-70pc probability of temperatures during June-August 2024 rising above the 30-year average in all parts of Japan. Average temperatures in Japan's major cities, such as Tokyo, Osaka and Nagoya, during June-August 2023 were higher than the long-term average. This implies that the country is likely to face similar summer temperatures as last year. Nuclear power output is projected to rise slightly in summer from a year earlier. The operating capacity of nuclear power plants is forecast at an average of 9,595MW during June-August, while average actual operating capacity was 9,563MW in the same period in 2023, according to Argus calculations based on data from Japan's Agency for Natural Resources and Energy and notices on the Japan Electric Power Exchange website. Hotter weather across the country in 2023 failed to lift thermal fuel demand, with power demand in Japan's 10 service areas averaging 104.3GW for June-August, down by 1.2pc from the same period a year earlier, according to nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators. The rainy season normally cuts solar output. But sunlight hours were unusually longer in 2023 compared with 2022, which increased solar output and helped curb thermal generation. Continued energy saving efforts also helped to cut electricity use. Japan's LNG consumption for power generation totalled 9.8mn t during June-August 2023, according to the trade and industry ministry. Coal use totalled 26.5mn t, while oil consumption — including fuel oil, diesel and crude — was 57,651 b/d. LPG use was 6,014t. By Nanami Oki and Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.