The 15th Asian Oil, Gas & Petrochemical Engineering Exhibition (OGA 2015)

Bismillahirrahmanirrahim
Assalamua’alaikum warahmatullahi wabarakatuh
Salam Sejahtera
Good morning
And Salam 1Malaysia

Yang Berbahagia Tan Sri Asmat Kamaludin,
Chairman of Malaysian Exhibition Services Sdn Bhd,
Yang Berbahagia Tan Sri Dato’ Zamzamzairani Mohd Isa,
Group Chief Executive Officer of Telekom Malaysia Berhad,
Distinguished Guests,
Ladies and Gentlemen,

It is indeed an honour for me to be here today at the 15th Asian Oil, Gas and Petrochemical Engineering Exhibition, or better known as OGA 15. I would like to thank the organisers for inviting me to officiate this important industry event.

2. Our industry today is facing a ‘Tale of Two Cities’. These are the best of times. Yet, these are the worst of times. Our industry output is growing at a rapid pace thanks to shale revolution that has transformed the US market. The US now produces around 9 million barrels per day, an 80% growth from the 5 million barrels produced in 2008. Global oil demand is expected to increase by 1.1 million barrels per day in 2015.

3. But, these are also the worst of times. Crude prices have come down from the highs of 115 dollars in June last year to the current norm of 60 plus. At the same time, our operating costs that shot up during 100 dollar oil has not come down as fast as the crude prices. Industry estimates puts anticipated layoffs of over 100,000 worldwide during this down cycle. So this is where we find ourselves today. It might not be possible for the industry to predict with certainty what the oil price would be next month or next quarter. But, we can prepare the industry to weather the fluctuations with what we do best – continuously innovate. If I may quote Charles Dickens’ ‘A Tale of Two Cities’, “There is prodigious strength in sorrow and despair”.

4. Our industry carries an enormous responsibility of fuelling the global economy, and specifically the growth of the emerging economies in Asia. Regardless of crude prices, we are expected to deliver. And, we shall deliver. The question is, how we do it amidst the tightening margins.

5. This is an opportunity for us to collaborate more closely on creative ways to reduce our cost structure and continuously innovate to systematically make our industry more efficient, more safe and more green. In this regard, PETRONAS is leading the Cost Reduction Alliance, Coral 2.0, an industry-wide effort involving 25 petroleum arrangement contractors (PACs). The aim is to inculcate a cost-conscious mindset that will ultimately embrace a structural change in the Upstream Business environment in Malaysia. This is not a mere cost cutting exercise. Beyond that, it is about ensuring the robustness and sustainability of our business. Can this silver lining go beyond Upstream business? I am sure there is much that can be learned from this exercise and emulated by other parts of our industry. And beyond Oil & Gas, by other industries. What is significant about Coral 2.0, it is a collaborative effort towards cost discipline. Yes, PETRONAS has announced CAPEX cuts of 15% and OPEX cuts of 25%. But, what we can achieve individually, we can achieve even more as an alliance. The sum, will definitely be greater than its parts.

Ladies and Gentlemen,

6. While we take cognizance of the current price levels and actions needed to navigate the current scenario, we must not forget that our industry is one built on the basis of very long term outlook. And PETRONAS has always taken a long term view of its investments, be it capital expenditure or our investment in talent. Short term price fluctuations shall not deter us from moving on and moving forward. The responsibilities we shoulder are too big, too important to be dictated solely by market closing numbers. Of course, we need to tighten our belts, review our cost structure and maybe postpone certain expenditures. But we should not take our eyes off the ball.

7. For PETRONAS, the USD 16 billion Refinery and Petrochemical Integrated Development, or RAPID, in Pengerang is proceeding as planned. PETRONAS Floating LNG, or PFLNG 1, slated to operate at Kanowit field offshore Sarawak shall be on site by 2016. With successful completion and operation of the regasification terminal at Sungai Udang, Melaka, we are proceeding with RGT 2 in Pengerang, Johor.

8. It should also be noted, that such a strategically significant industry like ours cannot operate in a vacuum without supportive government policies and incentives. In this regard, the Malaysian Government has taken concrete steps to spearhead the growth of our industry by identifying ‘oil, gas & energy’ as one of the key result areas in the ongoing Economic Transformation Program or ETP. Entry Point Projects such as Enhanced Oil Recovery (EOR), regional storage solutions and unlocking of premium gas demand, among others, are targeted to contribute RM131 billion in incremental GNI and generate an estimated 52,000 jobs by year 2020.

9. The 11th Malaysia Plan that was unveiled by the Prime Minister two weeks ago also highlighted ‘Oil & Gas Services Hub’ as one of the targeted key drivers for the growth of the services sector under the Plan that will guide Malaysia’s economic growth until year 2020.

10. The Government is also continuously improving the competitiveness of local industry landscape through rationalisation of subsidies, reduction of tax rate for companies involved in the development of marginal fields, opening access to import of LNG, and launching of Global Incentives for Trading (GIFT) to encourage global companies involved in trading of petroleum to establish their presence in the country.

Ladies and Gentlemen,

11. As the region’s premier Oil & Gas exhibition, OGA goes a long way in promoting collaborations. It is my hope that OGA 2015 will be a catalyst for collaborative cost discipline to be given the prominence it deserves. We need to collaborate to propel our industry towards a more efficient, safer and greener future.

12. Based on the successes of past shows, I believe OGA 2015 will be another record-breaking and high-impact business and networking platform for the industry, in both the upstream and downstream sectors.

13. My congratulations to the organisers for another sterling effort. And, to Telekom Malaysia, OGA 2015’s Official Telecommunications Partner and the sponsor of today’s opening ceremony. I wish you all every success in making the most of your investment in this exhibition.

14. On that note, with lafaz “Bismillahirrahmanirrahim”, in the name of Allah Most Gracious, Most Merciful, I officially declare open this Exhibition.

Thank you.

Wabillahi Taufik Walhidayah
Wassalamualaikum Warahmatullahi Wabarakatuh