Petronas awards 60% of contracts to local vendors

The state-owned oil firm prioritises local companies, except for specific and technical areas, says minister

pic by BLOOMBERG

PETROLIAM Nasional Bhd (Petronas) has awarded 60% of its total contracts this year to local companies, a main contributor to the country’s oil and gas (O&G) growth.

Economic Affairs Minister Datuk Seri Mohamed Azmin Ali said the state-owned oil company had prioritised local companies, except for specific and technical areas such as proprietary system and digital technology.

He said Petronas alone accounts for about 75% of the sector’s activities in Malaysia.

“In those areas (specialised segments), local expertise is very limited and needs to be sourced externally. For instance, in seismic deepwater acquisition services, neither local companies nor Petronas have developed technology within a short period.

“Such work also requires high capital and the use of complex technology, as O&G fields today are mostly in deepwater areas where there are high levels of contaminants such as sulphur, carbon dioxide and mercury.

“There are only four companies in the world that offer these services,” Azmin told the Dewan Rakyat yesterday.

He was responding to Datuk Seri Hasan Arifin (Barisan Nasional-Rompin) who asked the minister to respond to complaints that the industry continued to rely on foreign expertise.

Azmin said 108 companies from Petronas’ vendor development programme (VDP) have benefitted from contracts worth approximately RM9 billion as at October 2019. Four VDP companies have since been listed on Bursa Malaysia’s Main Market, while 30 VDP firms have operations overseas.

Local companies are also involved in Petronas’ exploration and production activities in countries such as Turkmenistan and Myanmar where local infrastructure and expertise are limited.

“This opens up opportunities for Malaysian consultants and vendors to explore new markets,” Azmin said.

He said of the 30 VDP firms with operations abroad, 17 are in Asia, eight in the Middle East, two in North America and one each in South America, South Africa and the UK.

“This demonstrates that initiatives like the VDP are successful in transforming local companies to become internationally recognised global players,” Azmin said.

In a separate response to a question by Datuk Alexander Nanta Linggi (Pakatan Harapan-Kapit) who asked if Petronas’ accounts would be tabled in the august house, Azmin said the suggestion can be considered to ensure that its management remain guided by principles of integrity and transparency.

Petronas has always provided its financials through quarterly announcements. It is the only Malaysian firm on the Fortune 500 Global list.