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Petronas to spend $7bn on upstream capital expenditure this year

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Amid more signs of a slight recovery in the Malaysian oil and gas (O&G) market, national oil company Petroliam Nasional (Petronas) said it is boosting upstream capital expenditure this year to MYR26bn ($6.7bn), local reports said.

Petronas’ upstream ceo Mohd Anuar Taib was quoted as saying that this figure was slightly higher than the budget for upstream expenditure in 2017 but did not give specific comparative figures.

While this is still only slightly more than half the MYR48.7bn Petronas spent in 2015, just as the bottom fell out of the oil market, Anuar emphasized the importance of capital discipline and not stressing the market into an undersupply situation.

“We want the capital discipline. The challenge we have seen in the past is that when everybody starts going for activities at the same time, then the whole supply chain is stretched. That adds to the costs," Anuar said.

He said Petronas would drill about 110 to 120 wells this year, and maintain exploration at 23 to 25 wells in Malaysia. Meanwhile, the company was also looking at exploration in Southeast Asia and wanted to develop assets in the region with partners, Anuar said while adding that the firm is also looking at growth opportunities in the Middle East.

After oil prices crashed in 2016 Petronas went on a strict austerity drive and said it would slash spending by MYR50bn over the next four years. This in turn has put pressure on Malaysian and regional contractors in the offshore support and supply services industry, many of whom are still languishing with idle capacity or teethering on the edge of survival with massive debts from rapid expansion in the years leading up to the crash.