With the NZCE pledge, Petronas joins a growing number of global peers in adopting this new climate ambition

by S BIRRUNTHA / pic by TMR FILE

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

Maybank Investment Bank Bhd (Maybank IB), in a research report last week, noted that Petronas is the latest to embark and adopt the NZCE pledge, joining a growing number of global peers, such as BP plc, Royal Dutch Shell plc, Repsol SA, Total SE and Equinor ASA in adopting this new climate ambition, in the wake of the 2015 Paris Agreement.

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

“On its part, Petronas allocated 5% of its capital expenditure for renewable energy (RE), set up a new business unit to make its push into RE and made investments or collaborations in this area,” it noted.

The investment bank added that through the climate ambition, Petronas will continue to intensify its efforts towards reducing Scope 1 and Scope 2 GreenHouse Gas emissions from its assets, including reducing hydrocarbon flaring or venting, capture methane emissions, minimise waste and promote recycling throughout the value chain.

Petronas will also deploy innovative operations and technologies and is developing low or zero carbon fuels, products and solutions, as well as pursue new avenues of revenue creation via investments in nature-based solutions.

That said, Maybank IB noted that floating production storage and off-loading vessel operator, Yinson Holdings Bhd, is ahead of the rest of the service providers in its green ambition.

Yinson recently acquired a 95% stake in Rising Sun Energy Pte Ltd, an India-based brownfield solar plant project (140MW capacity) that comes with a 25-year concession for RM92 million.

It targets to build up its RE capacity portfolio to 3GW over the next three years.

Maybank IB has maintained its ‘Buy’ call on Yinson, Dialog Group Bhd and Malaysia Marine and Heavy Engineering Holdings Bhd.

Maybank Kim Eng, meanwhile, noted in its research note that besides Petronas, PetroChina Co Ltd 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.

“Petronas maintained 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,” it added.

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.

Recently, Minister in the Prime Minister’s Department (Economy) Datuk Seri Mustapa Mohamed said Petronas will pay a higher RM34 billion in dividends versus the earlier committed RM24 billion to the federal government this year.

This is despite the national oil and gas firm recording a loss of RM21 billion in the second quarter of 2020.

Maybank Kim Eng said while this higher dividend payment is an unexpected development and ahead of the recently announced Budget 2021, the outcome is not entirely a surprise.

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