Southeast Asian NOCs Adapt to Lower Oil Prices

Shamsul added that the prevailing oil price of $70 to $75 a barrel made it uneconomical for Petronas to develop marginal oil fields and described companies seeking to get involved in this business as “dreaming." The Malaysian NOC does not plan to award contracts for new marginal oil fields unless oil settles at levels above $80 a barrel, he indicated.

With oil prices down by $20 to 25 a barrel since early December, more cuts in company expenditures, whether capital or operational, are expected.

“Petronas indicated a 30 percent cut in operating expenditure [opex] and there were also unconfirmed reports that capex will be cut by 30 percent,” Arhnue Tan, an analyst with Malaysia’s Alliance Research told Rigzone.

The company will “make capex deferments and reductions in opex in response to the recent steep 60 percent decline in oil prices. The deferments would reflect the change environment in the global oil and gas industry to ensure its resilience through the low oil price period,” Petronas said in a Jan. 18 press release.

Petronas’ Opex Cuts May Not Result in Job Losses

Still, the prospect of opex cuts led Malaysian newspaper New Straits Times to report that Petronas plans to trim around 10 percent of its workforce, promoting the NOC to “clarify that the report was misreported and inaccurate.”

Tan commented that opex cuts may not necessarily result in job losses, but acknowledged that this could be a delicate issue for a government-linked firm like Petronas to deal with.

“I didn’t hear of any explicit job cuts. I don’t think there were significant jobs cuts [by Petronas] during the 2008 financial crisis. If they take on a longer term view, the company will have to hire them again [employees that may be terminated now]. It takes time to train, especially as oil and gas talents are in short supply,” Tan explained to Rigzone.


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