PETALING JAYA: Hibiscus Petroleum Bhd has signed a deed of supply and collaboration with Trafigura Pte Ltd, covering several key areas of commercial cooperation, as part of the group’s initiatives and action plans to ensure business continuity in an environment of low oil prices and to safeguard its employees against the Covid-19 outbreak.
In a statement, the group’s managing director Kenneth Pereira said the agreement with Trafigura will allow the Hibiscus to leverage its existing and future production capacity with Trafigura’s global purchasing, funding and marketing capability.
Under the agreement, both parties have put in place a framework for the potential future offtake of crude oil by Trafigura from assets owned/projects undertaken by Hibiscus, and potential funding for projects and asset acquisitions pursued by Hibiscus.
Jointly working with Trafigura, Hibiscus has also taken the opportunity to lock-in the sales price for a substantial portion of its North Sabah production over 2020.
Trafigura is one of the world’s leading independent physical commodities trading companies, and is involved in the sourcing, storage, transport and delivery of a range of raw materials including crude oil and refined products.
Trafigura Asia Pacific CEO Chin Hwee Tan said one of the company’s key objectives is for us to continue to think locally while leveraging off our global platform.
“Trafigura’s business in Asia has grown materially in the last few years. In parallel, we are continuing to expand our support to a selected number of companies in the oil and gas upstream sector, in Asia and across the world.
“Local players such as Hibiscus Petroleum, together with the local financial system, are most important as our long-term partners as we continue to build our business in the region. We are looking forward to working with Hibiscus Petroleum as it continues to grow its asset base,” he said.
Meanwhile, in a separate statement, Hibiscus outlined a number of action plans to mitigate the risks posed by Covid-19, MCO and low crude prices.
Firstly, both its North Sabah and Anasuria teams are targeting a reduction in unit production costs for 2020 through the deferral of non-critical opex activities and managing general & administrative expenses.
There is also no major capital expenditure planned for Anasuria this year, while the North Sabah team has undertaken efforts to optimise development capex for its 2020 drilling campaign to ensure the clear economic viability of projects even with prevailing low crude prices.
“This has resulted in the asset targeting a reduction of unit development costs from US$14.2/bbl to US$10.5/bbl over the 2020 period,” it said.
The group is also targeting a total net production of 3.2 million barrels of oil for 2020, with planned offtakes for
Q4’20 may potentially be deferred to Q1’21 in order to realise higher crude prices in both North Sabah and Anasuria.
Hibiscus also said it will continue exploring new asset opportunities within its areas of geographic focus.
“Ultimately, we are readying ourselves for the recommencement of asset divestment programmes to be able to acquire assets at a reasonable price to boost the company’s oil production and reserves,” it said.