Malaysia's Petronas to support extension of oil output cuts

A logo of a Petronas fuel station is seen against a darkening sky in Kuala Lumpur, Malaysia on Feb 10, 2016.
A logo of a Petronas fuel station is seen against a darkening sky in Kuala Lumpur, Malaysia on Feb 10, 2016. PHOTO: REUTERS

KUALA LUMPUR (REUTERS) - Malaysian state-owned oil firm Petroliam Nasional Berhad will support any extension of oil output cuts by Opec and non-Opec producers, its chief executive said on Monday (May 8).

Petronas, as the company is known, announced last year that it would cut its oil output by up to 20,000 barrels per day (bpd) as part of Malaysia's commitment to reduce supply following an agreement between the Organisation of the Petroleum Exporting Countries (Opec) and non-Opec producers.

"If there is extension of the arrangement, of course we are committed to continue with the same production cut," Petronas chief executive officer Wan Zulkiflee Wan Ariffin told reporters at the Asia Oil & Gas Conference.

Earlier on Monday, Saudi Arabia's energy minister Khalid Al-Falih said he expected the Opec-led deal to cut output during the first half of the year to be extended to all of 2017.

Brent crude is at less than half the levels of mid-2014 due to ample supply in the market. It was trading at around US$49 (S$68.7) per barrel on Monday, up 1 per cent following comments by the Saudi energy minister.

Petronas, which contributes nearly one-third of Malaysia's oil and gas-related revenue, had warned earlier this year that oil prices will remain uncertain and that it maintained a"conservative" outlook for 2017.

Petronas, like other oil majors, has taken a hit from lower oil prices, though lower operating expenses, job cuts and project rollbacks helped Petronas post a higher 2016 profit.

Mr Wan Zulkiflee also said Petronas was looking to divest some assets as part of its regular business review, and that it may exit some assets if there is an opportunity.

However, he indicated that Petronas was still committed to its proposed US$27 billion Pacific NorthWest liquefied natural gas (LNG) project in Canada, and the company will make a final investment decision (FID) when the time is"appropriate."

The Canadian government gave the green light for the project in September, which took three years due to environmental concerns.

The project in northern British Columbia has come under criticism from aboriginal and environmental groups, who say the terminal's construction could destroy a crucial salmon habitat and produce large amounts of greenhouse gases.

Weaker LNG prices have also added to concerns over the future of the project. "We will announce FID when the time is appropriate," Mr Wan Zulkiflee said. "The steer that has been given to the project team is to explore all options so that we can develop an LNG plant which will be competitive with the other LNG producers in North America."