Malaysia-based state-owned oil company Petronas has decided to cut costs and reduce its output after posting a 68 percent drop in its first-quarter profits, due to the slump in demand amid the coronavirus pandemic, the media reported.
Petronas will cut its capital expenditure by 21 pc and operating costs by 12 pc this year to weather the damage caused by the Covid-19.
Wan Zulkiflee Wan Ariffin, president, and group chief executive officer told the media, “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.”
With regard to the cut in capital expenditure and operating costs, he said, “In doing so, we will strive as far as practically possible to minimise the impact of our domestic capital expenditure program.”
According to local media reports, most of the capex cuts will happen overseas, but supply chain constraints will hinder some of its domestic projects.
Petronas started five domestic upstream projects in the first quarter of this year. These projects include two new fields in peninsular Malaysia and three reworked fields in Sarawak, adding 11,000 boe/d of new output.
Earlier this month, Petronas sold its 50 percent interest in Block 52 offshore Suriname to ExxonMobil Exploration and Production Suriname. It now operates block 52 with 50 percent equity, while ExxonMobil holds the remaining 50 percent.
During the same period, Petronas also signed an agreement to supply liquefied natural gas (LNG) to an ISO tank-filling facility owned by China’s Tiger Clean Energy in the eastern state of Sarawak.