KUALA LUMPUR, Feb 26 — Petroliam Nasional Bhd (Petronas) is maintaining its annual capital expenditure (capex) at RM50 billion for 2020, but domestic capex will increase by more than 10 per cent to between RM26 billion and RM28 billion.

President and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said the higher capex allocated for domestic operations would be spent predominantly on upstream activities.

“There are a few projects. Some are ongoing. A lot of projects that we have already started, we need to continue.

“There are a lot of projects that have achieved final investment decisions (FIDs) last year,” he told reporters at a briefing to announce Petronas’ financial results for the year ended Dec 31, 2019, here today.

In 2019, Petronas saw 47 projects reaching FIDs, including the Kasawari major gas development project located offshore Sarawak which involves a total investment of between RM7 billion and RM8 billion.

Of the 47 projects, 42 were located in Malaysia while the rest were international projects.

Petronas also is allocating five per cent of its capex this year for renewable energy.

“This (the percentage) will vary from year to year, and in the next five years, it will go up to 7.0 to 8.0 per cent. It is a direction that we are taking,” Wan Zulkiflee said, noting that oil and gas would remain Petronas’ core business.

“I believe that we need to develop all forms of energy to meet the growing demand,” he added.

Wan Zulkiflee stressed that it was business as usual for Petronas despite the current domestic political situation.

“We are focusing our efforts to address the headwinds that the industry is facing during current times,” he said.

The national oil firm also expects more than a five per cent increase in domestic oil production and will capitalise on Pengerang Integrated Complex’s position as a petrochemical hub to fulfill regional market demand.

He noted that Opec+ — a grouping of the Organisation of the Petroleum Exporting Countries (Opec) and its allies — would be meeting again this year. “So far, Malaysia is committed to a (production of) 15,000 barrels (per day),” he said.

For its planning basis, Petronas has set a target of oil prices at “the high US$50s” per barrel.

On the COVID-19 outbreak, Wan Zulkiflee said Petronas had put in place measures to mitigate the impact, including protecting its employees.

“On the business side, in general, demand has really softened due to (the virus outbreak in) China — not only (affecting) liquefied natural gas but also Petronas Chemicals. Some derivatives such as methanol have been impacted,” he added.

China accounted for six per cent of Petronas’ total revenue.

“The thing is, how long will this last? That is the question that many of us would like to know (the answer to) and anticipate. The shorter (the duration) the better and we would like to see demand going up again,” said Wan Zulkiflee. — Bernama