The aim is to inculcate a cost-conscious mindset that will ultimately embrace a structural change Malaysia's upstream business environment.
"This is not a mere cost cutting exercise. Beyond that, it is about ensuring the robustness and sustainability of our business," Petronas' chairman Tan Sri Sidek Hassan said in his speech at the opening ceremony of 15th Asian Oil, Gas and Petrochemical Engineering Exhibition (OGA 2015) today.
Petronas has announced Capex cuts of 15% and Opex cuts of 25%.
"What we can achieve individually, we can achieve even more as an alliance. The sum will definitely be greater than its parts," he said.
In his speech, Sidek described the oil and gas industry as facing a "Tale of Two Cities", as these were the best of times and yet the worst of times for the industry.
"Our industry output is growing at a rapid pace thanks to shale revolution that has transformed the US market. The US now produces around 9 million barrels per day, an 80% growth from the 5 million barrels produced in 2008. Global oil demand is expected to increase by 1.1 million barrels per day in 2015," he said.
However, Sidek said these are also "the worst of times" as crude prices have come down from the highs of US$115 (RM425) in June last year to the current norm of US$60 plus.
Moreover, he said operating costs that shot up during US$100 per barrel period has not come down as fast as the crude prices.
Industry estimates puts anticipated layoffs of over 100,000 worldwide during this down cycle.
He pointed out that it might not be possible for the industry to predict the movement the oil price, but they can prepare the industry to "weather the fluctuations" through continuous innovation.
Sidek said Petronas has always taken a long-term view of its investments and short-term price fluctuations shall not deter them from moving on and moving forward.
He said the US$16 billion refinery and petrochemical integrated development, or Rapid, in Pengerang is proceeding as planned.
He also added that Petronas floating liquefied natural gas (PFLNG 1), slated to operate at Kanowit field offshore Sarawak, shall be on site by 2016 and it will proceed with regasification terminal 2 (RGT2) in Pengerang after the completion of RGT at Sungai Udang.
Officiated by Sidek, OGA 2015 has garnered over 2,000 exhibitors from more than 50 countries, displaying over RM2 billion worth of technology and in the oil, gas and petrochemical industries.
The exhibition is expected to attract 23,000 trade visitors. – The Edge Markets