Petronas cuts annual capex to RM40b-RM45b over next five years

 

Petroliam Nasional Bhd (Petronas) has further reduced its allocation of capital expenditure (capex) to between RM40 billion and RM45 billion per annum for the next five years.

Senior vice president and group chief financial officer Liza Mustapha said the national oil company, which previously earmarked RM50 billion to RM60 billion annually for its capex, had revised the amount due to the projected global oil prices and industry outlook in the coming five years.

"Petronas also plans to spend a higher capex for domestic activities than the international programme. We will increase domestic spending to 55 percent (of capex), while international programme will be at 45 percent. In the previous allocation, spending stood at 52 percent domestic and 48 percent international," she said during a virtual press conference to announce the group's 2020 financial results in Kuala Lumpur today.

Previously, Petronas’ capex declined by 22 percent year-on-year, largely in line with the group’s earlier guidance of lower budgeted capex in the financial year ending Dec 31, 2020 (FY20), with most of expenditure being incurred upstream and in local investments.

Its president and group chief executive officer, Tengku Muhammad Taufik Tengku Aziz, said the company would move in the direction based on its portfolio and portfolio objectives and focus on speciality chemicals, renewable energy and hydrogen.

"We will increase the capex for renewable energy to nine percent out of the total FY21 capex from five percent previously, but it doesn't mean we are taking our foot off completely from exploration because production continues to be prepared for," he said.

Notably, gas and new energy is Petronas’ second-largest area of investment, taking up 22 percent of the group’s capex, possibly signalling the group’s acknowledgement of the energy transition trend.

“We are also charting the growth pathway to secure new opportunities amidst the acceleration in energy transition, especially from new and non-traditional areas.

"Although gas remains a crucial and cleaner source of fuel, diversification into renewable energy is imperative, with having the right skills and capabilities in place as part of the group’s retooling human capital effort," he said.

In a statement, Petronas said it would remain cautiously optimistic and was looking to future-proof its portfolio by venturing into new energy spaces and pursuing innovation with focused execution.

The group remains confident that its efforts and continued focus on commercial and operational excellence, while preserving healthy levels of liquidity, will ensure its business sustainability.

- Bernama