KUALA LUMPUR: Local oil, gas and energy players are urged to tread carefully and respond cautiously towards the uptrend seen in the crude oil prices, as volatility are expected to continue due to trade wars and geopolitical risks.
Petroliam Nasional Bhd (Petronas) president and chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said despite improving outlook, which saw a spike in Brent oil prices hitting the 4-year high at US$80 a barrel this morning, it is important to be mindful of the unpredictable industry landscape.
“Currently, the outlook for the oil and gas industry is also improving. Year-to-date Brent is at US$72 per barrel, a significant sharp increase from the average of US$54 per barrel in 2017 and the oil and gas sector here seems to be responding positively.
“We can see this in the number of investments which have increased slightly, in tandem with the higher oil prices and better prospects. For September 2018, 20 rigs are in operation across Malaysian waters compared to 15 at the end of of 2017.
“As encouraging as it is, we can still expect volatility to continue, given the prevailing external factors such as trade wars and other geopolitical risks.
“While it is evident that players are now changing gears from survival to growth mode, I urge all players to tread carefully and respond cautiously to the unpredictable landscape as we do in Petronas,” he said in his speech at the 4th Malaysia Oil & Gas Services Exhibition and Conference 2018 (MOGSEC 2018).
Oil prices were reached near the 4-year high as looming US sanctions against Iran and unwillingness by the Organization of the Petroleum Exporting Countries (OPEC) to raise output supported the market.
Today, Brent crude futures traded at US$81.45 per barrel, up 25 cents or 0.3 per cent and close to the intraday peak touched the previous day at US$81.48, the highest since November 2014.
Wan Zulkiflee also reminded stakeholders to adapt to disruptions that is set to challenge how business-as-usual is being carried out for the sector to be redefined and reshaped across the industry.
“Just like other industries, ours is facing multiple disruptions that are changing the way business is being done. These include new technologies, data-enhanced products, and innovative competitors and redefined customer expectations.
“In the next few years, our industry is expected to experience rates of digital disruption that will reshape and redefine common operating procedures that we know today.
He said new technologies will underpin various processes, from fully-automated drilling operation and autonomous pipeline inspection to the rig-less plugging and abandonment of wells.
Subsea solutions, too, are predicted to rely actively on monitoring and data analytics while biodegradable polymers will be widely deployed across the industry.
“These sources of disruption require companies to not only rethink their operating models, but also their talent and organisational culture. We need more talents among vendors who are skilled and adaptable to navigate through these changes.
“Furthermore, increasing focus on economies of scale and integrated solutions, owning technologies and having export capabilities can propel local companies to greater success,” added Wan Zulkiflee.
He was speaking to about 7,000 trade visitors and business professionals from the oil, gas and petrochemical industries globally at the MOGSEC 2018, which is expected to generate business value of more than RM400 million.
The event was officiated by International Trade and Industry Minister Darrel Leiking and Malaysian Oil & Gas Services Council (MOGSEC) president Sharifah Zaida Nurlisha and TM One chief executive officer Azizi A. Hadi.