Petronas alienate 10% of capex to non-traditional areas


PETROLIAM Nasional Bhd will allocate 10% of its RM60 billion 2021 capital expenditure (capex) to non-traditional areas such as specialty chemicals and solar energy.

Group CFO Liza Mustapha (picture) said this was in line with the group’s plan to achieve net-zero carbon emissions by 2050.

“For normal operations, we have to factor in decarbonisation costs and then we have to talk about having revenue coming from sources other than predominantly hydrocarbon-based or gas.

“We need to have a target, whereby quite a sizable chunk of our revenue in the next five to six years is going to be coming from something which is not directly oil and gas (O&G),” she said during the MIDF Conversations webinar.

However, they will need to allocate it slightly differently from a capital allocation perspective and would need extra allocation due to decarbonisation costs, even for the same levels of production.

Liza said the capex is a combination of both ongoing and new projects, which was supported by people returning and catching up on activities.

“The amount of capex we allocate is a function of affordability and what we need to do. So right now, quite a sizable amount of RM40 billion-plus is actually plus decarbonisation efforts, so that is quite sizable out of the RM60 billion.

The group also plans to include carbon pricing in its investments such as investments in Canada and South Africa to achieve net-zero targets.

Petronas is coming up with a secondary price for carbon and trying to incorporate that into its decision-making process.

“We’ve also had a few carbon-neutral liquefied natural gas (LNG) cargoes, and then we quantify the emissions coming off the production of the LNG, and then we purchase credits to offset.”

Petronas is focusing on its new business stream called “Clean Energy Solutions” which will be strategically managed by a separate board and will be an ongoing process.

The government aims to make Malaysia a hub for carbon capture and storage solutions in the South-East Asian region which is a new business.

This enables the group to also venture and stream into new business activities that the O&G ecosystem can come into.

However, Liza felt that it needed to orchestrate for license, time, effort and capital.

“If we get all that right together with the O&G players that I think is really good for formulation because it becomes a whole new revenue stream business altogether,” she added.