Petronas to scale down exploration

Caroline PELAEZ-HUE - 19/05/15

PETRONAS is scaling down its exploration activities by June in view of the soft crude oil prices, while maintaining its current production level. Petronas will be scaling down its exploration activities. Many companies who are involved in drilling have been notified that it (Petronas) will stop drilling activities come June this year. Petronas will not retract current jobs that are contracted with the national oil firm, but it will not start any new drilling jobs for the time being.

In February, The Edge Financial Daily reported that Petronas was likely to postpone the second phase of the Balai Cluster marginal field risk service contract until crude oil prices recover to above US$80 (RM287.20) per barrel. 

As at last Friday, Brent crude was trading at US$65 per barrel while Tapis was at US$71 per barrel.

If the exploration halt drags on for long, it will be a major concern for drilling companies with assets nearing contract expiration, as well as those who have new assets under construction that are almost completed but yet to be contracted. Drllers like drillers like UMW Oil & Gas Corp Bhd (UMW-OG), Perisai Petroleum Teknologi Bhd or other oilfield service providers such as Scomi Energy Services Bhd, Deleum Bhd and Uzma Bhd may see a spillover effect from a scale-down in exploration activities.

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