Malaysia's Petronas Hastens Decarbonization Push, But Oil Business Still Vital
09.13.2021 By Ricardo Perez - NEWS

September 13, 2021 [SPGlobal] – Malaysia’s Petronas is intensifying efforts to invest in cleaner energy solutions and deploy innovative technologies to trim its greenhouse gas emissions as it steps outside the realm of its traditional activities to meet its sustainability targets, the state-run energy company said in its latest activity outlook report for 2021-23.


However, the integrated oil and gas company with global operations would not neglect its refining and upstream businesses over the next decade as oil markets will likely offer a wide array of sales and export opportunities in the post-pandemic era, middle distillate marketers and trading strategists at the company told S&P Global Platts.

Petronas is pushing for the increased use of natural gas as a cleaner source of fuel while building capabilities in renewable energy for the security and sustainability of its supply, it said.

The company’s recent acquisition of Amplus Energy Solutions, a distributed solar energy solutions provider and developer across India, is a step in this direction.

It has also provided a vehicle to explore opportunities in onshore and offshore wind energy generation for other Southeast Asian countries, with an aspiration to generate 3 GW of renewable energy capacity by 2024, Petronas said.

Having incorporated carbon capture in offshore and onshore processing facilities for over 10 years, Petronas is embarking on its first complete Carbon Capture, Utilization and Sequestration project through offshore Carbon Capture and Sequestration, or CCS, implementation, while maturing technologies for onshore processing plants to utilize CO2 and convert it into petrochemical products, it said.

The company’s first CCS project, upon completion in 2025, will be the world’s largest offshore CCS project to date.

Separately, the company in its latest quarterly results statement on Aug. 27 said it had seen firm demand for its LNG bunkering operation in the Straits of Malacca. It has already carried out nine LNG bunkering operations in the region as the maritime industry focuses on sustainable shipping.

On Aug. 18, the company completed the delivery of its maiden carbon neutral LNG cargo to Shikoku Electric. The carbon credits used by Petronas for the delivery were certified through a rigorous verification process under the Verified Carbon Standard program, it said at the time.

Liquid fuels for next decade

Despite the rapid increase in global investments in clean energy, Petronas said it estimates oil and gas to continue to account for around 50% of the global energy demand over the next 10 years.

Liquid fuels will remain the main energy source for Asia’s transportation sector for at least another decade or two. Major refiners across Asia including Petronas, SK Innovation, S-Oil, ENEOS, PTT and CPC Taiwan said they are hoping for a strong revival in sales of automotive, marine and especially jet fuel, once COVID-19 ends.

Tourism contributes heavily to Southeast Asia’s transportation fuel consumption. Petronas’ expanded refining capacity and improved middle distillate production efficiency following the start-up of new Refinery and Petrochemical Integrated Development, or RAPID, facility in 2020 would help increase all sales opportunities once the COVID-19 era comes to an end, the company marketing sources and trading strategists said.

Petronas declined to provide specific oil products output target for the next few years, but the marketing and trading sources indicated that the company’s refined product output is unlikely to peak at least until 2025-2030.

Malaysia produced 15.9 million mt of diesel and gasoline combined in 2020, 18.89 million mt in 2019, 18.05 million mt in 2018 and 17.86 million mt in 2017, according to data from the Department of Statistics.

Outside Southeast Asia, Petronas is also keen to expand and explore more sales opportunity in India, the world’s third largest energy and petroleum consumer, the company sources said.

Petronas has stepped into India’s retail oil and gas business jointly with Indian Oil Corp., or IOC, earlier this year.

In July, IOC chairman Shrikant Madhav Vaidya said the 50:50 joint venture between IOC and Petronas — IndianOil Petronas Private Ltd., or IPPL, will expand its focus to retail transport fuels, such as diesel and gasoline, as well as city gas distribution.

Upstream activities

In 2020, there were as many as 23 drilling rigs with peak utilization in March, Petronas said.

The rig count started declining from May onwards due to reprioritization of investments on plummeting global oil prices and the COVID-19 pandemic. However, the company maintains a steady outlook for the next three years for all types of rigs, it said.

Meanwhile, Petronas said in its quarterly results that it recorded a total daily production average of 2.345 million boe/d in the first half of 2021, higher than the 2.255 million boe/d recorded in H1 2020, mainly driven by higher gas production due to increase in demand.

In H1 2021, there were six exploration discoveries — four discoveries offshore Sarawak and Sabah in Malaysia, one discovery offshore East Java in Indonesia and one discovery offshore Brunei.

Among other milestones, it also completed two major greenhouse gas emissions reduction projects, located off the coast of Sarawak, in June.

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