August 21, 2015

Petronas Will Not Letting Go Its Staff Due To Low Oil Price

Petronas plans to stick to cost-saving measures and will not resort to letting go of its staff and assets to weather the current gloomy scenario for the oil and gas sector.

Corporate Strategy and Risk Senior Vice-President Adif Zulkifly said to date, Petronas has saved RM640 million by optimising logistics.

"This is very encouraging... There are a couple more initiatives for cost-savings to be put in place," he said during a keynote session at the one-day South-East Asia Summit 2015 moderated by The Economist Intelligence Unit Asia Thought Leadership Senior Editor Kevin Plumberg.

Despite a bearish outlook for global oil prices, Adif said Petronas was committed in allocating at least RM50 billion a year for capital expenditure, whereby a majority of the fund would be channeled to its refinery and petrochemical integrated development project (RAPID) in Pengerang.

He said global oil prices, which currently stood around US$47 per barrel, would not improve significantly unless there was a major demand shock.

"We are currently facing a supply glut... the last time we saw this, it took the industry close to five years to recover.

"The present situation (of low global oil price) will stay for a while and we are only expecting a modest recovery and not back to the level of US$100 per barrel," he said.

Besides the supply glut, he also attributed the bearish outlook to the market's surplus inventory with storage capacity easily adding about three million barrel of oil per day.

However, Adif remained optimistic, saying that the national oil and gas company viewed this as an opportunity to be more disciplined in its spending by simplifying work processes and optimising operations.