Petronas aims to achieve NZCE by 2050 in line with global peers


PETROLIAM Nasional Bhd’s (Petronas) aspiration to achieve net zero carbon emissions (NZCE) by 2050 is in line with its global peers, with renewables seen as a major growth area and strong prospects in the energy space as the energy transition agenda gathers pace.

Maybank Investment Bank (Maybank IB) said Petronas joined a growing number of global peers, such as BP, Shell and Equinor in adopting this new climate ambition, in the wake of the 2015 Paris Agreement.

“Petronas’ green strategy/goals/roadmaps are generally, relatively similar to its peers. Renewables are seen as a major growth area.

“On its part, Petronas allocated 5.0 per cent of its capital expenditure for renewable energy (RE), set up a new business unit to make its push into RE, and made investments/collaborations in this area,” said the investment bank in its research note today.

Maybank IB said besides Petronas, PetroChina is the other notable player in Asia with net-zero goals.

“The plan is short on details, but we assume improved hydrocarbon efficiency and capture, renewables and emission reduction technologies,” it added.

Maybank IB said Petronas maintained that it will continue to look at accretive oil and gas opportunities, but a portfolio review is likely considering exiting Gharraf oilfield in Iraq to become cleaner.

Meanwhile, the investment bank said higher-than-expected cash outflow will further impede Petronas’ ability to recover from the current cyclical downturn as it battles with a volatile oil market.

However, Petronas has responded aggressively to this setback by cutting its 2020 capital expenditure and operation expenditure plans by 21 per cent and 12 per cent respectively, as well as recently retrenching its workers at its Myanmar operation.

Recently, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed announced that Petronas will pay a higher dividend of RM34 billion to the federal government for the financial year ending Dec 31, 2020 against the earlier committed RM24 billion.

This is despite the national oil firm recording a loss of RM21 billion in the second quarter ended June 30, 2020.

Whilst this higher dividend payment is an unexpected development, ahead of the Budget 2021 announcement (later today), the outcome is not entirely a surprise, said Maybank IB.

In September, Petronas also paid RM2.95 billion in sales tax on petroleum products to Sarawak.