PETALING JAYA: Petronas Gas Bhd (PetGas) has allocated a RM1.2-1.3 billion capital expenditure (capex) for 2021, slightly higher than RM1.1 billion reported for the previous year, according to CFO Shariza Sharis Mohd Yusof.
“The higher level is in line with all the planned activities, should there will be new projects being announced, that figure may rise,” she told the media after the group’s AGM today.
Shariza elaborated that some activities in the previous year were affected by the Covid-19 pandemic and the resulting movement control order (MCO) restriction.
This year, she pointed out that PetGas’ 42km new lateral gas pipeline project or the gas turbine power plant in Pulau Indah, Selangor contributed to the slightly higher capex.
Moving forward, the CFO stated that the group’s capex allocation would not be deterred by Petronas’ aspiration of achieving a net zero carbon emission by 2050, which was announced in November last year. The national oil company outlined the net zero carbon emissions commitment that will steer the organisation towards providing cleaner energies as part of a holistic approach to sustainability.
On the whole, the oil and gas upstream sector has seen significant capex cuts with the transition towards clean and sustainable sources of energy driven by climate change concerns.
“As far as the energy transition is concerned, it will not affect the PetGas because more than 90% of the group’s revenue is fixed under our long term contract arrangements. Hence, there is no variability in there, and it is by the booked capacity.”
Looking ahead, PetGas managing director and CEO Abdul Aziz Othman projected that there won’t be much variation in the group’s revenue this year as its gas processing and transmission business operates on a long term contract.
He pointed out that its utilisation rate is quite high and demand is expected to remain stable in line with what it has seen this year.
“On top of the capacity of our plants, there have been efforts to maximise the capacity we have installed. We are not making efforts to sweat the assets,” said Abdul Aziz.
As for electricity generation, he observed demand saw some drop in the first three months of the MCO but had rebounded in the later part of the year.
“On the whole, we do not expect a lot of variations to revenue, while on the utility side we expect some improvement on the electricity demand compared to last year. However, we do not expect the contribution to be a lot compared to 2020.”
The CEO affirmed that PetGas will continue to support the gas industry liberalisation through Third Party Access and it is exploring various opportunities to evolve with the changes and growth of the business.
“We will be focusing on three key growth areas namely to position PetGas in providing integrated solutions for power and utilities in the new industrial zones in Malaysia.
“We also want to explore opportunities to grow in Malaysia and regional power generation and regasification capacities including operation and maintenance services, leveraging on our experience and expertise,” he said.
Moving forward, chairman Adnan Zainol Abidin said it has some projects in the framing stage at the moment, which are in the area of integrated utilities solutions for industrial parks that are being developed in the Southern Economic Corridor as well as the Northern Economic Corridor.
“Another focus area for us is to increase the capacity of our power generation capacities that we have. These are the projects that are still at the assessment stage today,” said Adnan.