Oil prices outlook still uncertain as demand slows down, says Sapura Energy

Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. — Reuters pic
Oil pump jacks work at sunset near Midland, Texas, US, August 21, 2019. — Reuters pic

KUALA LUMPUR, July 3 — The outlook for oil prices will continue to be uncertain, largely driven by the double jeopardy of a slowdown in demand and unabated supply from producers, said Sapura Energy Bhd.

President and group chief executive officer Tan Sri Shahril Shamsuddin said accordingly, the oilfield services and equipment as well as exploration and production markets would likely remain volatile, especially in areas driven by capital expenditures linked to commodity cycles.

“However, the picture is not completely bleak. The oil and gas market outlook varies significantly by region, with the Middle East and South America growing the most over the long term.

“Low oil prices may have delayed sanction in some projects, but gas developments in Southeast Asia, the Middle East and West Africa are expected to continue,” he said in the company’s 2020 annual report.

Shahril said that deepwater and brownfield projects were expected to withstand fluctuating oil prices.

While carbon fuel will still account for a significant portion of global energy demand, renewable energy is fast becoming a contender, with its share projected to grow from five per cent today to 15 per cent in 2040.

“Sapura Energy remains optimistic about our ability to navigate the turbulence. Since the 2014 downturn, Sapura Energy has adopted an agile strategy meant to steer us through a highly cyclical industry,” he said.

Moving forward, this financial year ending Jan 31, 2021, would be a period of cautious optimism while the industry faced another downturn as the Covid-19 pandemic dampened consumption and slowed down the global economy, he said.

The oil and gas services provider swung to a net profit of RM14.21 million for the first quarter ended April 30 from a net loss of RM109.10 million a year earlier despite revenue falling to RM1.36 billion from RM1.63 billion previously.

Sapura Energy’s order book stood at RM14.0 billion, with RM0.8 billion in cumulative new contract wins to-date. — Bernama

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