Page 14 - Malaysia Marine & Offshore Industries Directory 2020/2021
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                 MALAYSIA MARINE & OFFSHORE INDUSTRIES DIRECTORY 2020/2021 EDITORIAL
 “Against this challenging backdrop, our focus is to preserve cash and maintain our liquidity, continue our cost compression efforts and respond to changing market conditions with pace,” it said in a statement.
The company, which initially planned to maintain its overall capital expenditure (capex) of RM50 billion for 2020, will now reduce it by 21%. It will also cut its operating expenses by 12%. As for its domestic capex of RM26 billion-RM28 billion, Petronas said it will strive “as far as practically possible” to minimise the impact of the cuts. It also plans to maintain its dividend of RM24 billion to the government.
For the long term, however, Petronas will stay committed to its three-pronged growth strategy, which is to maximise cash generators, expand its core business, and step out to future-proof the organisation and ensure the company’s long-term sustainability.
Part of this “future-proofing” include focusing on renewable energy, for which the company had planned to allocate 5% of its capex. This percentage is expected to go up to 7% to 8% in the next five years. While Petronas believes that all forms of energy need to be developed to meet growing demand, oil and gas are expected to remain the company’s core business.
In the Petronas Activity Outlook report for 2020-2022, Group Procurement Vice President Liza Mustapha advised industry partners and players that despite a challenging outlook, they need to “embrace innovation, technology and digitalisation, which can bring bigger benefits over a longer horizon to enhance competitiveness, speed, accuracy, agility and ultimately resiliency. The industry also needs to forge stronger partnerships that would ultimately enrich lives for a sustainable future.”
An example of this partnership was put into practice when three associations that represent the interests of the Malaysian oil and gas industry announced that they have engaged with Petronas to mitigate and address the dismal situation affecting
the industry. The Malaysian Oil and Gas Services Council (MOGSC), the Malaysia Offshore Support Vessels Owners’ Association (MOSVA), and the Malaysian Offshore Contractors Association (MOCA) observed social distancing requirements and held a video conference meeting with Petronas.
Representing over 500 companies and a workforce of 60,000, the three organizations brought up the challenges they have been facing and sought guidance and assurance from the national oil company. Issues discussed include maintaining sustainability and stability in order to survive this difficult time, attaining clarity for the industry to move forward and establishing the guiding principles of the “new normal”.
Among the recommendations made are the need for joint government and industry cost optimisation exercises at a more holistic level across the ecosystem, and the need for the industry to be less reliant on the global supply chain so that it can become more competitive in the long run. It was also agreed that to manage future challenges, such dialogues must be continued so that the right information can reach industry players and the market.
The importance of partnerships and information sharing was highlighted in the Petronas Activity Outlook when the company announced that it is sharing contracts that cover a broader spectrum of jobs with substantial values for large players as well as Small and Medium-sized Enterprises (SMEs). Many of these contracts are up for re-tendering during 2020-2022. This presents an opportune time for industry players to strategize on resources, new technology and tactical partnerships.
Economies have opened up around the world and oil prices have been moving up, but industry experts in Malaysia believe this recovery is still fragile with many unknown elements still at play. The one thing that Petronas, its partners and other oil and gas companies would agree on, however, is that the sooner both the price and the pandemic can be brought under control, the faster their goals and objectives can be realised.
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