Petronas wants cooperation among state oil companies
Petronas wants cooperation among state oil companies
Dow Jones, Bandar Seri Begawan
Asia's national oil companies should work together to better compete against the global supermajors and ensure security of supply, Mohd. Hassan Marican, chief executive of Malaysia's Petroliam Nasional Bhd., or Petronas, said Monday.
Hassan encouraged cooperation between national oil companies, especially among the three main gas producing countries - Malaysia, Indonesia and Brunei - according to his keynote address at the Gasex 2002 conference in Brunei.
"National oil companies in the region should get together to leverage on our combined strength in order to better compete in the marketplace, especially in liquefied natural gas, or LNG," he said.
Cooperation makes sense for Brunei, Indonesia and Malaysia as the three account for more than 65 percent of the total LNG trade in the region. The three countries also share common customers in North Asia - South Korea and Japan, he added.
Hassan said the three countries are already cooperating in the LNG sector by "synchronizing their respective plant operations in order to maximize plant availability to ensure continuous and secure supplies to their customers."
Brunei, Indonesia and Malaysia also have agreed to pool their shipping capacities in order to sell their excess LNG cargoes, he said.
Together, the three producing countries have access to LNG plants in four locations in the Southeast Asian region and 25 LNG ships, which can ensure security of supply for its customers.
"We have already seen last year how the benefits of cooperation alleviated possible problems that could arise from the Arun shutdown by ensuring continuity of supplies to LNG customers," he said.
Conflicts in the Indonesian province of Aceh where the Arun field is located have posed security problems for gas operator ExxonMobil Oil Indonesia Inc., forcing it to halt production for five months in 2001 and disrupting LNG exports from Indonesia. The long-standing dispute between local separatist group Free Aceh Movement and the military remains unresolved.
Cooperation among the three gas producing countries can also enable them to better compete as the LNG market shifts toward spot trades. Most LNG deals in Asia are set for a 15- to 20-year term period.
"The commoditization of LNG would provide an opportunity to create additional values through the pooling of cargoes and shipping capacity to respond to the market needs," he said.
This means Brunei, Malaysia and Indonesia would better be able to respond to opportunities to make spot LNG sales to North America and Europe if they pooled their resources.
Cooperation among Asia's national oil companies will also allow them to better compete with supermajors, Hassan said.
"I believe that given time, the national oil companies will be able to stand side by side with the more established players either as partners or as competitors," Hassan said.
Customers would also benefit from a more formalized partnership among the three producing countries, Hassan said in a press conference later Monday.
In the case of supply disruptions, such as the one last year from Arun, Malaysia and Brunei could step in and prevent a crisis from developing in consumer countries, he added.
Natural gas industry officials and executives from more than 20 countries are meeting in Brunei for the five-day Gasex 2002 conference, which began Sunday.