The President and CEO of the Malaysian Petronas “Tengku” company, Muhammad Tawfiq, condemned the calls for an absolute halt to investment in oil and gas projects, describing it as a “catastrophe”.
Tawfiq stressed that the lack of investment in oil and gas cause There are severe market fluctuations and affect energy security, according to what was seen by the specialized energy platform, quoting the S&P Global platform.
He said – during his participation in the 2023 Asia Energy Conference – that policy makers are under intense pressure regarding investment in energy, and some have called for a complete halt to fossil fuels.
“But the system we are transitioning to is not ready yet, so I think we need to stop these violent swings, especially in Asia, where we need a path to return economic activity to at least pre-pandemic levels,” he continued.
The areas most vulnerable to underinvestment
The head of Petronas “Tengku”, Muhammad Tawfik, explained that there was a first stage of lack of investment, due to two price collapses in the past decade, then financial institutions said that the money that is pumped into oil and gas will be closed capital with a limited effect due to decarbonization.
He said that investment reappeared after the withdrawal of 40% of natural gas supplies in Europe after the Russian war in Ukraine, and a structural gap or structural deficit appeared.
For his part, Vice President of “S&P Global”, Daniel Yergen, confirmed that the region most vulnerable to weak investment in oil and gas is Asia.
“We’ve seen this effect in countries like Bangladesh and Pakistan, they weren’t able to afford LNG and had to go back to coal,” he said, according to S&P Global.
“You simply will not have a successful transition without energy security and affordability,” he added.
Funding crisis… a double whammy
The head of Malaysian energy company Tengku, Mohd Taufik, highlighted that much of the financing promised for the energy transition — including the $130 trillion in private capital committed by the Glasgow Financial Alliance for Carbon Neutrality — has not yet fully materialized.
“But the problem literally here is that making it available doesn’t necessarily make it available,” he said.
He added that when Petronas was surveying to raise money for fossil fuel projects, it found risk premiums were high, or lending terms unworkable.
“In other words, it was a roundabout way for the financial institutions to say, ‘We’re not going to make this affordable for fossil fuel projects,’” he said.
On the other hand, financial institutions have been reluctant to fund carbon capture and renewables, arguing that carbon capture and storage is a way to legitimize oil and gas, and that redirecting money to renewables where policy frameworks are not mature is risky. .
Tawfik described the situation as a “double whammy… being an industry we now need to start rethinking how we distribute capital”.
The head of the Malaysian company stressed that if financing continues to slow down, NOCs may have to choose between energy security and affordability on the one hand, and the energy transition on the other.
“We will make sure it is affordable and safe first, rather than going towards an energy transition,” he said, adding that if energy security is not addressed there will be no effective transition.
Petronas production of oil and gas
The head of Petronas “Tengku”, Muhammad Tawfiq, revealed – during his participation in the 2023 Asia Energy Conference – that the company aspires to reach 2.7 million barrels per day of oil production.
The company recorded an average daily production of 2.434 million barrels of oil equivalent per day, during the fiscal year ending on December 31, 2022.
Petronas expects its domestic production of oil and gas to peak at about two million barrels of oil equivalent per day by 2024, according to information seen by the specialized energy platform, quoting Reuters.
The executive vice president and executive director of the exploration and production sector in the company, Adiv Zulkifli, said that about 60-70% of Petronas’ production comes from natural gas, and it will remain so in the future.
He added – in his remarks to the Asia Energy Conference -: “We continue to search for more gas portfolio, but of course there is a commitment in Malaysia, and I think we need to continue to do some oil exploration to fill our refineries.”
Petronas also aims to expand its overseas portfolio to 700,000 bpd by 2024, while also increasing production from its LNG joint venture in Canada with Shell.
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