KUALA LUMPUR (June 17): Petroliam Nasional Bhd (Petronas) is looking to build resilience in the face of heightened geopolitical uncertainty, including “reshaping” the group’s upstream portfolio to ensure value-creation and sustainability in the long run.
This, according to Petronas upstream business chief executive officer Mohd Jukris Abdul Wahab, includes establishing a resilient break-even price for assets under its portfolio.
The state-owned oil and gas company’s move comes amid heightened geopolitical tensions in the Middle East, which sent crude oil prices on a bout of volatility. At the time of writing on Tuesday, Brent was up 0.51% at US$73.60 per barrel.
“We are really in a difficult position now; the environment is very challenging.
"We are very conscious about how we continue to create value in the long run, sustainably,” Jukris said at a dialogue session at Energy Asia 2025 here on Tuesday.
“There are a couple of things that we are currently looking at very seriously in terms of how to build resilience along the way. One lever that we are looking at very aggressively now is to reshape the portfolio that we have,” he added.
Jukris emphasised the importance of restructuring Petronas' portfolio now to ensure it can confidently withstand periods of volatility or uncertainty five to 10 years from now.
“We have a clear target for 10 years from now in terms of how we define our portfolio, from the point of value delivery. For example, we set what kind of break-even price we want to see in the future portfolio and unit production costs for every asset that we bring in.
“When we talk about low-carbon targets, we have cautiously built this into the investment decision. Any new projects that we are putting in, we built this consideration on the cost to decarbonise,” he said.
Jukris told Bloomberg in an earlier interview that it was seeking to produce oil at a break-even level of US$50 per barrel, from US$60 to US$70 in the past five years.
“Over time, we have been switching out assets because of the balance between value delivery and carbon emission targets. Assets that are categorised as hard to abate, costly to abate — we may want to hive off from the portfolio and bring in something fitting,” he added.
Another aspect of building portfolio resilience, according to Jukris, is cost efficiencies. He specifically mentioned improving the efficiency of project design. "We always talk about what risks to mitigate, assurances we want to implement. Sometimes we tend to overdo it, putting layers and layers of assurances, and it comes at a cost."
“Can we do better than what we have been doing in the past? In terms of taking a little bit more risk, bring more risk tolerance. We believe that if we do that, we shake off some of these unnecessary layers of assurances. The unnecessary cost can be shaved off,” he said.