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KUALA LUMPUR – Crude oil prices are likely to correct from 2023 but would normalise to pre-pandemic level, Petroliam Nasional Bhd (Petronas) said.
President and group chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz said the group was cautious about the current crude oil prices and noted that the current high prices were due to underinvestment in the last five years.
“The eventual cyclicality of this industry will take effect. There will be corrections. Right now, we see the elevated oil prices on the back of underinvestment in the past five years. People are reacting and getting back on the investment cycle.
“After two or three years of no final investment decision in the energy space, we have seen now it climb back to 470 million tonnes worth of online capacity,” he told reporters after Petronas’ first-half ended June 30, 2022 financial performance announcement here today.
Recently, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said “extreme” volatility and lack of liquidity meant that the oil futures market is increasingly disconnected from fundamentals and the Organisation of Petroleum Exporting Countries and its allies (OPEC+) might be forced to cut production.
At the time of writing, Brent crude was down 2.5% to US$102.50 (RM458.74) per barrel.
Asked whether Petronas would consider renegotiating tenders with its vendors, Petronas executive vice president and upstream chief executive officer Datuk Adif Zulkifli said the group was in the midst of renegotiating with its vendors to find solutions to rising input costs.
He added that drilling costs have surged significantly by 200% on some daily rates. – Bernama, August 30, 2022