The oil and gas industry is expected to have a steady start for the year 2024 base on last year’s trend where the Brent crude oil price traded between US$70 and US$90 per barrel (Energy, November 24, 2023).
Petroleum Engineer, Fellow of Institution of Engineers Malaysia Dr Ir Jeyanthi Ramasamy (pic) said that in the December issue of Short-Term Energy Outlook (STEO), the US Energy Information Administration (EIA) forecasts the Brent crude oil spot price will increase to an average of US$84/bbl in first-half 2024, partly driven by recently announced OPEC+ production cuts.
The EIA expects the Brent spot price will average US$83/bbl next year. This expectation is not far from a Reuters survey of 30 forecasts from economists and analysts sees Brent crude averaging US$84.43 a barrel in 2024 (Muyu Xu).
The ongoing geopolitical conflicts could cause price rises beyond these expectations. As for Malaysia, the 2024 Budget was based on a Brent oil price assumption of US$85 per barrel, despite the lowered forecasts (Kana, 2024).
Looking at Malaysia’s oil and gas landscape, in the 2023-2025 Activity Outlook 2023-2025 Petronas reported that in 2024, a total of 99 wells are planned to be drilled under the development, appraisal, and exploration drilling program. It also reported that a significant increase is expected for Plug and Abandonment (P&A) activities in 2024 to honor the commitment made by the regulator.
Dr Ir Jeyanthi said a total of 13 greenfield projects and 15 brownfield projects at various stages are expected to take place. The fields to be developed include marginal fields, late life assets, fields with high contaminants, high complexity reservoirs and stranded fields (Petronas, 2023).
The challenging fields create opportunities for operators with innovative, disruptive, and cost-effective solutions to make sustainable business outcomes.
Environmental, Social, Governance (ESG) is also significant to oil and gas companies because of the growing pressure on the industry to protect the environment. Oil and gas operators are facing multi-faceted challenges to secure capital funding for their investment, incorporating ESG in the business while complying with changing regulations and challenges.
ESG has become the yardstick for financial institutions to judge the sustainability and ethicality of their investment in oil and gas companies.
The oil and gas industry is deeply connected to each of the individual ESG elements.
Safety in the industry is the topmost priority at all levels, and environmental concerns are taken into consideration in any project development. The energy production and carbon emission of each oil and gas company is under the careful watch of regulators and are integral to the assessment of investors of the company’s overall performance.
A few examples of how oil and gas companies tackle the environmental challenges include carbon capture and carbon emissions reduction, energy portfolio diversification, operational energy efficiency, resource conservation, and waste disposal.
Under social responsibility, companies must pay importance to the social aspects that affect the employees, suppliers, customers, and the communities where it operates, including implementing suitable policies and procedures.
Corporate governance is now tasked to ensure strategic decisions are adopted along with an ethical approach to the employees and management structure including reporting transparency, leadership diversity, executive compensation, and shareholder rights.
Many oil and gas companies do not take ESG as a daunting task but an opportunity to build value and increase the efficiency of their operations.
In end, for fossil fuel operators in the country, it remains a continuous challenge to balance energy production and security with the stewardship of the environment.
