Petronas takes workplace action amid Covid-19 pandemic

May 4, 2020

Out of date, but hey.

Dateline 2020-03-16, Upstream Online:

Malaysia’s national oil company Petronas has put in place special working arrangements for its thousands of employees as a precautionary measure to minimise the risk of the deadly Covid-19 virus.

With immediate effect, Petronas is “strongly encouraging” employees who can work from home, to do so where possible. No timeframe was given for this measure.

“For employees who are required to be physically present in the office or at our operations, Petronas is taking the necessary steps to ensure their health and safety while at the workplace,” the company said on Sunday without giving details.

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Fire, explosion at Petronas’ oil refining complex at Pengerang

May 3, 2020

Dateline 2020-03-16, The Edge:

A fire and explosion occurred at the Pengerang refining and petrochemicals complex in southern Malaysia, state news agency Bernama reported on Monday, citing the Petronas-Saudi Aramco joint venture that runs the operation.

The incident occurred on Sunday night and an emergency response team has been activated, Bernama reported.

“The situation is under control,” Bernama said, citing a statement. The news agency did not report any injuries or damage.

Petronas directed queries to the joint venture company Pengerang Refining and Petrochemical (PRefChem), which has not responded to a Reuters request for comment.

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Diversify revenue base, O&G players urged

May 2, 2020

Dateline 2020-03-16, NST:

Malaysia’s oil and gas services providers will need to diversify revenue base to mitigate their operations against oil price shocks, analysts said.

They must also increase operational efficiency to lift margins or venture into alternative energy business to reduce dependency on oil prices.

MIDF Research analyst Noor Athila Mohd Razali said tumbling oil prices could delay the award of new contracts and renewals. This would result in margin compression for O&G service providers.

“The low oil price environment will have an impact on the entire O&G value-chain be it directly or indirectly.

“The upstream producers will be more directly impacted by the low oil price environment as lower revenue as a result of higher cost of production and low selling price will weigh on earnings,” she told the New Straits Times.

For downstream players, Athila said feedstock prices would be more favourable following the drop in oil price.

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Sarawak party says state should claim ownership of its oil

May 1, 2020

Dateline 2020-03-14, Malay Mail:

After the High Court ruled that the state has the right to impose sales tax on petroleum products, the next step is for the state government to declare the ownership and economic rights over oil and gas resources, Sarawak People’s Aspiration Party (Aspirasi) stressed today.

Its president Lina Soo suggested this could be done by passing legislation in the State Legislative Assembly to repudiate the Petroleum Development Act (PDA) and Territorial Sea Act (TSA).

“Both the PDA and TSA have impinged upon Sarawak’s territorial integrity over our petroleum resources and territorial waters, and by not seeking a constitutional redress, our sovereignty will be compromised in acquiescence as silence will be taken to mean consent,” she asserted.

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High Court rules Sabah, Sarawak can impose sales tax on petroleum products

April 30, 2020

Dateline 2020-03-13, FMT:

The High Court today ruled that Sabah and Sarawak have the right under the Federal Constitution to impose sales tax on petroleum products.

High Court Judge Azahari Kamal Ramli dismissed the leave application for judicial review by Petronas to declare the Sarawak state sales tax null and void.

Petronas had claimed that some parts of the state’s Sales Tax Ordinance 1998, which require the national oil company to pay the 5% sales tax on petroleum products to Sarawak, were unconstitutional.

The company’s lawyer Malik Imtiaz Sarwar argued that the notice of assessment issued by the Sarawak government to Petronas seeking payment of the tax on petroleum products was therefore invalid.

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Govt may consider floor price for petrol

April 29, 2020

Dateline 2020-03-13, Malaysian Reserve:

THE government may consider setting a floor price for petrol and diesel amid declining oil prices, said Domestic Trade and Consumer Affairs Minister Datuk Alexander Nanta Linggi (picture; centre).

“We will have to listen to all parties and brainstorm the idea. If it is good, we will bring this up to the Cabinet,” he told reporters after clocking in on the first day of work at his ministry in Putrajaya together with his deputy Datuk Rosol Wahid.

This came after Petrol Dealers Association of Malaysia (PDAM) suggested a floor price to be introduced for both petrol and diesel which in turn would protect dealers, consumers and the government.

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Low oil prices to remain, say experts

April 28, 2020

Dateline 2020-03-12, FMT:

 An analyst has warned that oil prices are expected to remain low in the wake of reports that oil markets have suffered their worst drop since the Gulf War.

However, Renato Lima De Olivera, a senior fellow at the Institute for Democracy and Economic Affairs, said this would also present a silver lining for several sectors.

He said the world would likely see low prices in the near future and that it might take some time for supply and demand to adjust again.

This is unless Russia and other Opec countries coordinate to reduce production, which would allow prices to recover.

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Oil price collapse could lead to cost pressures, defaults

April 27, 2020

Dateline 2020-03-11, Malaysian Reserve:

THE lower crude oil price is likely to hit contract rates and cashflows leading to potentially higher non-performing loans and impairments, particularly for oil and gas (O&G) companies with weak balance sheets and provide supplementary services to big oil producers.

As crude oil prices fall into the US$30 (RM126) a barrel levels, AxiCorp Financial Services Pte Ltd chief market strategist Stephen Innes said the lower price is bound to diminish revenue streams and likely take a toll on the financial capabilities of support service provider companies to service their loan debt.

He said Malaysian O&G companies are price takers, so a lot of industry constituents could struggle if prices remain low.

“I’m not suggesting any company in particular. The same thing is happening in Calgary, Alberta, when oil prices get depressed, the industry as a whole struggles,” he told The Malaysian Reserve (TMR).

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Direct hit seen for oil and gas companies

April 26, 2020

Dateline 2020-03-10, The Star:

The negative sentiment on oil prices, stemming from the Covid-19 outbreak and Opec+’s failure to cut oil production, is expected to cause a direct fundamental impact on domestic oil and gas companies, just as some of these companies are starting to see an improvement in their earnings.

UOB Kay Hian said that the combination of Covid-19 and Opec+’s failure may force Petronas to take action, potentially reducing activities if the national oil and gas company’s cash flow in the first half of the year is severely impacted.

“Covid-19 will be a triple whammy to Petronas in the form of oil prices (upstream income), petrochemical demand (downstream income) and disruptions or force majeures on long-term liquefied natural gas (LNG) exports (gas and new energy income), ” it said.

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Crude oil’s crash jeopardises Asia’s cleaner fuel ambitions

April 25, 2020

Dateline 2020-03-10, FMT:

Shockwaves from the oil price crash have hammered Asia’s biofuels industry, upending optimism over its future.

Crude’s nosedive erases any chance of discretionary blending of palm oil with diesel and drastically inflates the cost of government mandates.

“These are unprecedented times,” said Alvin Tai, an analyst at Bloomberg Intelligence.

Biofuels, such as a blend of diesel with palm, need to be attractively priced compared with fossil fuels to encourage consumption, and that often requires subsidies.

The almost 25% plunge in Brent crude oil on Monday, therefore, made palm oil’s competitive position dramatically worse.

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