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Collaborations key to catalyse Malaysia’s rapid economic growth

Malaysian Reserve

The strategic partnership between Petronas and Saudi Aramco, two successful national oil companies in the world, on the Refinery and Petrochemical Integrated Development (RAPID) project in Malaysia will be a milestone achievement when refinery and cracker plant begins operation by the first half of 2019.

The first crude oil cargo shipment is expected to arrive in October as the companies prepare trial runs at the new plant. RAPID has a crude processing capacity of 300,000 barrels per day. Although RAPID is one of the four new refineries in Asia, expectations are high that it will put Malaysia at the forefront of the regional downstream industry.

Most importantly, Petronas’ close ties and collaboration with Saudi’s Aramco will augur well for the former establishing increased new international collaborations in other areas. The strong partnership and upcoming commencement of RAPID will certainly establish Malaysia as the preferred investment destination and acts as strategic hub to China, India, North Asia and ASEAN for oil and gas players.

In this context, the oil major has developed a strong pool of highly skilled and talented workforce, which today serves its 35 offices around the world and various international oil and gas companies. Many have established their own outfits or service companies, some of which have been listed on the Malaysian stock market.

It has trained more than 14,000 technical professionals since 1981. The advent of digitization, AI and machine learning has resulted in a paradigm shift and demanded a new breed of industry professional conversant in big data, digital and specific technological skills. This is an area where both Petronas and Aramco have already invested in as part of the plans for RAPID to lead stay ahead of competitors in the industry.

With RAPID, the Malaysian NOC appears to be ‘rejuvenated’ in its drive to continue delivering more value on its business propositions and partners, enabling it to deliver on its commitment to contribute to the growth of the people, community, businesses and government of Malaysia.

With the Petronas – Aramco deal well underway, a new development has risen for Petronas well within the shores of the country. Petroleum Sarawak or Petros – bane or opportunity?

Formed in March 2018 by the Sarawak Government, Petros made a strong stand in protecting its rights to the natural resources in the state under the Sarawak Oil Mining Ordinance. Despite the negativity in the dealings and pending legal tussle between Petronas and Petros, there is an opportunity for a ‘win-win’. By just looking at the Petronas-Aramco concept and business approach, a model resolution could be established to resolve the deadlock between Petronas and Petros.

A Petronas-Petros strategic collaboration would enable extensive revenue growth opportunities for Sarawak, which in turn could enable the state to address as well implement new socio-economic development programmes.

Just as in the development of marginal fields involving the oil major, capable local service providers and mid-level international oil companies, a similar model could be explored with Petros for greenfield activities in the upstream sector.

With the advent of digitalization in operations and processes, oil resources can be optimally mined through use of new technologies vis-à-vis strategic manpower needs. In fact, through technology, Petronas has been able to increase resource recovery rate in fields that were considered depleted. An example is the Enhanced Oil Recovery technology introduced in 2014.     

Through strategic collaboration between Petronas, Petros and other PSCs, the state would see added value in its upstream and downstream activities that benefits the state government and ultimately the people. More importantly, it would provide vast employment opportunities for local Sarawakians.    

The Petronas-Petros could be a landmark collaboration in Malaysia, restoring confidence amongst foreign and domestic oil & gas fraternity which will pave the way for new businesses and development opportunities in the state. It will enable optimization of resources, ensuring sustainability and delivering value to shareholders.

VP Christian

Ex- Research Institute Director

Sources:

Petronas and Saudi Aramco form 2 joint ventures at RAPID Pengerang (New Straits Times)

PETRONAS Activity Outlook 2019-2021 (Petronas)

The Petronas-Sarawak oil intrigue (The Star Online, Business News)