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Petronas to expand work orders
PROJECTS & COMPANIES
MALAYSIA’S state-owned Petronas has said in its latest activity forecast that while it expects to step up operations over the next three years, the short-term outlook remains challenging.
The company released its Petronas Activ- ity Outlook for 2020-2022 on December 13 and noted that several contracts were due to be retendered. It said: “This would be an opportune time for players to strategise on resources, new technology offerings and strategic partnerships.”
Petronas’ vice-president of group procure- ment, Liza Mustapha, said the challenges the company faced included geopolitical upheavals, prolonged trade tensions and a global economic slowdown.
“Given the persistent market volatility, the chal- lenging landscape would require Petronas and all its partners to continue to be conscious in manag- ing costs, implement activity levelling to sustain offshore activities and pursue innovative solutions to unlock value in our supply chain,” she added.
Work orders
Petronas has a capital expenditure budget of about MYR255bn ($61.63bn) for 2020-2024, of which MYR50bn ($12.08bn) has been allocated for 2020.
The company expects to award contracts in 2020 for around 26 drilling rigs and hydraulic workover units (HWUs), 10-13 new wellhead platforms and one central processing platform next year. It also anticipates laying 79km of car- bon steel line pipes.
The company’s report said decommissioning activities were likely to pick up in the company years. Petronas intends to decommission 37 sub- sea facilities and wells in 2020, compared with 38 wells and one platform this year. However, the company is examining plans to decommission plans 54 wells in 2021.
Petronas believes it will need 10-18 underwa- ter support vessels in 2020, up from 11 in 2019, with a stable outlook for 2021 and 2022.
The company also anticipates needing nearly 150 anchor-handling tug supply boats, 70 fast crew boats, 56 platform supply vessels and 30 landing craft tanks in 2020.
Cautious outlook
While the company’s plans to increase its orders are good news for the Malaysian oil services sec- tor, Petronas remained cagey about the short- term outlook.
The company noted that while oil prices had significantly improved in recent years, averaging $64 per barrel between January 1 and November 18 compared with $44 per in 2016, prices were likely to be volatile in the immediate future.
It noted that rising supply from non-OPEC producers would help depress prices even as ongoing supply disruptions in Libya and Nige- ria and tensions in the Middle East helped to support them.
“The US, currently the largest producer of crude oil, is targeting to be a net energy exporter by 2020, a first for the US in nearly 70 years,” the report said, before highlight- ing additional projects being brought online in Canada, Brazil, Guyana and Norway. The International Energy Agency (IEA), mean- while, has predicted that non-OPEC produc- tion will add 2.3mn barrels per day (bpd) of oil supply in 2020.
“While US sanctions on Iran and Venezuela have driven oil production from both countries to the lowest points in decades, the sanctions, however, only caused ripples in the oil market, since every barrel displaced is substituted by other oil producers,” the report added.
These pressures will make the company, which has built a reputation since the 2014 oil price crash for lean budgeting, wary of over- spending. While the state major’s suppliers will be glad that the company has expanded its capex plans for the next few years, these new contracts will likely still offer lean terms.™
Week 50 19•December•2019 w w w . N E W S B A S E . c o m P7