PETRONAS President and Group CEO Tan Sri Wan Zulkiflee Wan Ariffin, who attended the World Economic Forum in Davos, discusses oil prices and the Company's growth focus for 2018, with Bloomberg TV.

During the interview, Tan Sri Wan Zulkiflee shared his views on the outlook for oil prices, PETRONAS’ priorities for 2018 and future challenges.

Outlook on Oil Prices

Tan Sri Wan Zulkiflee highlighted three dimensions when considering the outlook of oil prices which include supply, demand and speculation.

“What we see today is a congruence of many events, essentially the OPEC and non-OPEC voluntary production cuts that is helping to boost up the oil price; we also see some supply disruption in Libya. The demand side is looking good globally and we expect this to continue in the next few years,” he said.

Tan Sri Wan Zulkiflee, however, noted that the increase in US shale production would certainly have an impact on prices.

Meanwhile, on the speculative side, he said that PETRONAS will closely monitor events that are happening in the Middle East, North Korea and other parts of the world that could impact crude oil prices.

“In PETRONAS, we continue to take a conservative view and our budgets are lower than what oil prices are today,” Tan Sri Wan Zulkiflee added.

PETRONAS’ Priorities for 2018

For the past few years, PETRONAS has undertaken many strategic initiatives to respond to the drop in oil prices earlier.  

“We did a lot of housekeeping which included looking at our cash, how we deliver our projects, simplification of processes, revised our talent development, technology and very importantly, the culture of the organisation,” he said.

Despite the challenging environment, PETRONAS has successfully commissioned a few projects which include PETRONAS’ Sabah Ammonia Urea plant (SAMUR) in Sipitang, Sabah, and PETRONAS’ Floating LNG Satu in offshore Sarawak, which became the world’s first floating LNG facility.

For 2018, Tan Sri Wan Zulkiflee said PETRONAS will focus more on growth through a three-pronged strategy. “One, we are still looking at our cash; secondly, we want to expand our core business. We are a fully integrated company and I believe in this business model. We are looking at ways to extend the value chain of our business; thirdly, we are looking into things that are new to PETRONAS, for example, we are looking at the potential of being involved in renewables such as solar and other new energies.”

Future challenges for PETRONAS

While remaining optimistic, Tan Sri Wan Zulkiflee anticipates three major challenges that could impact the Company.  The first is talent to drive the Company forward.  He said that PETRONAS is investing in talent, especially in new areas of business that the Company is considering.   

A second challenge would be in oil prices. Tan Sri Wan Zulkiflee said PETRONAS is familiar with the cycles in oil prices and is confident that the Company is now in a stronger position to withstand these cycles; and the third challenge is in the development of renewables against fossil fuels. 

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