Malaysia’s National oil company Petronas has revised its planned capital expenditure (capex) upwards from RM250 bln to RM300 bln over the next five years, at an average of RM60 bln pa. The new amount is significantly higher than the RM34.9 billion it invested in FY 2010-2011. Petronas CEO has attributed this to new projects such as the US$20 bln (RM60 bln) Refinery and Petrochemical Integrated Development (Rapid) in Johor as well as the need to upgrade facilities to enhance yield at ageing oil fields. The planned capex does not include mergers and acquisitions. The group is expected to have additional funds for re-investment after reaching an agreement today with the government to limit dividend payouts to 30% of net profits starting 2013. The new dividend payout agreed is significantly lower than the 74% and 57% in the previous two years.
The capex will be intensified to outpace rising costs, to upgrade asset integrity and enhance the yield of existing assets as well as to drive company growth. The upcoming investments will also help the company with the more challenging ventures such as enhanced oil recovery as well as costly deep-water and unconventional hydrocarbon extraction. Besides trying to enhance oil yields at existing fields and expanding deep water exploration, Petronas is also tapping the Canadian shale gas sector and inked a deal last week with Canada’s Progress Energy Resources for half a stake in three shale gas fields in northeastern British Columbia.
Rapid, Petronas’ new integrated refinery and petrochemicals complex in Southern Johor, has the potential to complement Singapore and turn the southern tip of Malaysia into an epicentre of oil and gas in the region, similar to the Amsterdam-Rotterdam oil hub. Rapid, which was announced last month, will comprise a crude oil refinery with a 300,000 bpd capacity, a naphtha cracker that will produce about 3 mln pa of ethylene, propylene, C4 and C5 olefins. It will also include a petrochemicals and polymer complex that will produce differentiated and highly-specialised chemicals.