KUALA LUMPUR (March 13): Petroliam Nasional Bhd (Petronas) plans to spend RM300 billion in capital expenditure (capex) in the next five years, with 80% of it focusing on its core business of hydrocarbon to bolster energy security while striking a balance on energy transition efforts.
Petronas will funnel 20% of its five-year capex into decarbonisation and energy transition activities, although Petronas President and group chief executive officer Datuk Tengku Muhammad Taufik Tengku Aziz is confident that future energy mix would continue to prioritise fossil energy.
“There is still a clear focus on our core business and so far, we believe that hydrocarbons will remain in the future of the energy mix for a few decades to come,” said Taufik during a briefing on the group's results for FY2022 on Monday (March 13).
“My point of view in dealing with energy security and security of supply in emerging economies, we must make sure affordability is addressed. In the interim period renewable energy may not be ready. So what are we going to do with the emerging economies?
“Are we going to deny them the energy they need by slapping on emission caps? We can’t. We want to fuel the transition, while making sure energy security is still maintained for the economies that need them,” he said.
He further stated energy security will be at the forefront of any government in ensuring growth and economic wellbeing of a nation.
“The entire energy industry players are not climate change deniers and are doing what they can. But of course the pace will differ,” he said.
The global investment in the energy transition sector last year recorded US$1 trillion, which is almost equal to fossil fuel investments.
In FY2022, the national oil and gas group spent RM50.1 billion for capex, of which RM37.6 billion went to its core business and RM12.5 billion to its decarbonisation investment and activities.
He added the escalating concerns everywhere about global energy security also accelerated investment towards cleaner investments, adding Petronas will actively intensify its efforts in decarbonising the business although capital spending for this business remains small.
“Our 20% capex allocation for decarbonisation comes up to RM15 billion a year. Our decarbonisation is not all about pursuing items like solar or wind. We are talking about some low hanging fruits dealing with methane emission which we have committed targets.
“So in that respect, one should not look at decarbonisation as only clean energy but making sure we are far more emission friendly,” he added.
Taufik added that in the long run, Petronas’s renewable energy spending trajectory will grow especially as the shift away from fossil fuel is an ambition every oil and gas company pursues.
“So far as Petronas is concerned, we remain committed to the Petroleum Development Act 1974 which is to monetise the oil and gas resources in the country, capitalise the oil and gas sector and create value for shareholders. Be it renewable or core portfolio, it just has to make sense from an investment perspective,” he said.
He stated at this point of time 20% allocation of capital spending will be enough for decarbonisation goals and pursue the necessary growth in that space.