KUALA LUMPUR (June 28): Government-linked funds Employees Provident Fund (EPF) and Permodalan Nasional Bhd (PNB) are keen to stay invested in oil and gas (O&G) companies to support the industry’s transition into the low carbon and green economy.

EPF chief strategy officer Nurhisham Hussein said while many investors are turning away from the carbon intensive-industry, EPF has no plan to exit because it believe in investing in the industry’s transition towards renewable energy.  

“From the EPF's perspective, when we talked about the engagement with the O&G sector — divestment is the very last priority,” Nurhisham said in a panel session at the Energy Asia 2023 conference on Wednesday (June 28).

Nurhisham said investors should consider investing in O&G companies to assist the industry in achieving their sustainable development.

“If we remove the investment funds from O&G, we make the cost of capital higher. We [are] also making their energy transition a lot harder because it costs a lot (to transition to renewable energy sources),” he noted.

Therefore, he said the provident fund will continue to invest in O&G companies that are committed to reducing their emissions and pledged to decarbonise.

“What we want to see is progress, commitment, and as long as those are in place, we will continue to be partners in making that energy transition happen,” he added.

The O&G industry has always been in the spotlight when it comes to net-zero transition as the industry was directly and indirectly responsible for about 15% of total energy-related emissions globally, which is equivalent to 5.1 billion tonnes of greenhouse gas emissions.

EPF, a key participant in Malaysia's equity markets that invests in diverse portfolio including fixed income to secure returns for its members, does not have controlling stakes in the Malaysian upstream O&G companies.  

It, however, does have a substantial stake in Petronas-linked counters, including 11.12% in Petronas Chemicals Group Bhd, 12.69% in tanker vessel outfit MISC Bhd, and 12.38% in fuel retailer Petronas Dagangan Bhd.  

PNB, on the other hand, has a 62% stake in jack-up rig operator Velesto Energy Bhd, and a 40% stake in integrated upstream player Sapura Energy Bhd.

PNB president and group chief executive officer Ahmad Zulqarnain Onn said PNB is set to decarbonise its investment portfolios by 2050.

“We have to get our portfolio to net zero by 2050. It means that every single company that we invested in has to get on this decarbonisation journey,” said Ahmad Zulqarnain.

Regardless, he said PNB will continue to invest in emitter companies to assist them in reducing their greenhouse gas emissions.

“The emissions intensity needs to come down. So that is why we try to be pragmatic and not dogmatic about it. We will engage rather than divest, but we will optimise the portfolios,” he said.

PNB is the country’s largest asset manager with assets under management of RM343.1 billion. It covers strategic investments in Malaysia’s leading corporates, global equities, private investments and real estate.