The Petronas twin towers is seen behind the company coporate logo in downtown Kuala Lumpur on May 13,2011. State-owned energy giant Petronas said it will construct a 20 billion USD integrated refinery and petrochemicals complex in Malaysia's southern Johor state neighbouring Singapore. AFP PHOTO

A few weeks back I posted that Petronas (Potonah is Kelantan slang) will be laying off 5000 staff in 2018. Petronas issued a media statement to deny my post.  My sources got the info from inside Petronas. It was not a number plucked out of the sky.

Its no big deal whether you are laying off 5,000 or 10,000 people. Just state the case and move on. Lets see what we can do about it.

Then yesterday Petronas has released quite a shocker of a statement. They are shutting down 50% of their  ‘jack up’ rigs over the next two years. Other rigs will be cut by 60%.  This Petronas’  ‘tutup kedai’ schedule beginning 2018.


Petronas painted sombre picture of O&G industry

requirement for assets such as rigs halved from 3 years ago.

report made public for first time to instil reality into industry

outlined requirements from companies servicing Petronas until 2020.

report: need for jack-up rigs reduced by half

to 10 rigs for 2018-2020, compared to 2013-2014.

tender assisted drilling rigs (TADRs) down by 60% for next 2 years

companies providing jack-up rigs are UMW and Sapura Energy
lower requirements in tandem with lower output by Petronas

Petronas will produce 100,000 fewer barrels to 1.7m barrels (m/boe) next 5 yrs

Petronas Activity Outlook (PAO) 2018-2020 crude prices US$50 – 60 per barrel.

report to enhance transparency on future capex

shape industry into fewer but bigger players.
reason for transparency to push further industry consolidation
reshape Malaysian O&G ecosystem
so that companies more efficient
4,000 O&G companies registered with Petronas.

Norway, similar-sized O&G deposits, has 700 players

anchor-handling tug supply boats, platform supply vessels, straight supply vessels and fast crew boats –  critical oversupply

UOB Kay Hian said delays in new project roll outs in past few years.
Petronas’ global LNG projects at risk
unlikely to be significant upside in capex in coming years
Barakah Offshore Petroleum Bhd among losers
overcapacity in O&G fabricators, marine support vessels in Malaysia
8 domestic fabricators licensed with Petronas, 6 listed on Bursa
listed fabricators are MMHE, Sapura Energy, TH Heavy Engineering Bhd1st time Petronas making available asset requirements
2014 set aside 71% of RM39bil for capex  (RM28b)
2016 down to less than 30% of RM41bil (RM12b)

will be even lower over next few years (< RM8b??)

My comments :  Well it looks like MORE than 5000 staff are going to be laid off, not just in Petronas but also throughout the O&G industry – of which Petronas is the central spine.

There is no way Petronas is going to cut so much capex without cutting down on its staff.

The issue is NOT just about Petronas cutting capex or cutting staff.

The issue is not just about the Malaysian O&G industry cutting capex and cutting staff.

The issue is what are we going to do about it.

This is NOT accusing Petronas or pointing fingers at the O&G industry.

Dont be stupid.

Grow up.

Be professional.

We have a real problem. How are we going to solve it?

To solve problems quickly, you (including Petronas) must admit facts quickly.

Do not try to hide things, sweep things under the rug and try to deny things that are really happening.

Just be frank and transparent – like what this PAO (Petronas Activity Outlook) Report is trying to do. Thank you.

Now the entire O&G industry in Malaysia can also plan their future more carefully over the next two years.

That analyst from UOB Kay Hian says :   UOB Kay Hian said “Petronas’ global LNG projects at risk”

This is referring to that Canada and other gas investments around the world by Petronas which are at serious risk.  This issue is still overhanging.

I believe the numbers here are bigger than 1MDB, 2MDB, Felda all put together.

Petronas has released its PAO for the next two years. Very good. Thank you. Be transparent.

Can we have a similar transparent update on the status of ALL Petronas investments overseas?

What and where are the projects.

How much has been spent.

Which ones profitable, which ones losing money.

How much positive or negative returns are they generating.

How much more needs to be spent.

List out who are the main contractors and how much they are being paid.

Petronas is NOT a private company.

It is a taxpayer owned company.

Petronas’ bottomless pit of cash is not an oil well.

It is the taxpayers’ pocket.

Bear this in mind ok.