Petronas is committed to output cut if pact between oil producers is extended
KUALA LUMPUR (Nikkei Markets) -- Petronas, Malaysia's state-owned oil-and-gas company, will continue to cut output as agreed if a six-month pact between global oil producers signed in December is extended, its chief executive said Monday.
"We've committed to the 20,000 barrels-per-day cut and if there is an extension of the arrangement, of course we are committed to continue with the same production cut," Wan Zulkiflee Ariffin told reporters at a news conference in Kuala Lumpur.
The Southeast Asian nation is part of an agreement among 24-oil producing countries, led by the 13-member Organization of the Petroleum Exporting Countries, to remove nearly 1.8 million barrels per day from production in a bid to prop up crude prices.
Wan Zulkiflee's comments came after Saudi Arabia's energy minister, Khalid Al-Falih, said in his speech at an oil and gas conference in Kuala Lumpur that the pact between OPEC and non-OPEC members is likely to be extended into the second half of the year and 'beyond.' The current agreement expires next month. OPEC will meet on May 25 to decide whether to continue with the reduction.
Petronas, Malaysia's sole Fortune-500 company and its most profitable enterprise, announced in January 2016 that it aims to cut its capital and operating expenditure by as much as 50 billion ringgit ($11.4 billion) over the next four years as it coped with the erosion in oil prices.
The company returned to profit in the last quarter of 2016, posting a net profit of 9.4 billion ringgit as against a net loss of 4.7 billion ringgit in the same quarter of 2015.
Among the casualties of Petronas' spending cut is a $32-billion liquefied natural gas project in Canada, although Wan Zulkiflee said on Monday that the company is exploring all options to monetize the asset.
Oil prices have declined about 12% so far this year amid persistent oversupply concerns after gaining more than 50% in 2016. Brent, the global benchmark for crude oil, rose 0.5% to $49.34 a barrel on Monday.
While the recent increase in U.S. output reduced the impact of the cut, inventory levels will begin to decline partly due to robust end-product demand this year, Al-Falih said Monday.
"I believe the worst is clearly behind us," he said. Global oil demand is expected to grow at same 'healthy rate' as in 2016, supported by robust demand from India and China, he added. "I am very confident the global oil market will rebalance and return to a healthy state," the minister said.
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