KUALA LUMPUR: Brent crude oil prices which have climbed by some 15% to US$74.10 per barrel, may see further upward pressure from the ongoing war in the Middle East.

“The rise in oil prices have been quite pronounced after the war started.

“We are not calm but we are like a duck swimming in the water and we are furiously paddling,” said Petroliam Nasional Bhd (PETRONAS) president and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Aziz at a media conference here yesterday.

He said the developments in the Middle East are being watched very closely.

“PETRONAS has operations in Iraq while we also have employees deployed in Abu Dhabi,” Tengku Muhammad Taufik added.

He said PETRONAS had been continuously monitoring its operations there due to the changing geopolitical situation.

“We take supply for granted and we must not underestimate the importance of supply in these times of crisis.

‘These situations can cause a shock to the system. This will be a test for the industry.”

Tengku Muhammad Taufik also noted such crises underscored the importance of continued investments into oil and gas exploration.

Commenting on this, vice-chairman of S&P Global Daniel Yergin said the rise in oil prices on the global stage is not a surprise and geopolitical security is an issue that the industry would have to contend with.

Meanwhile, Tengku Muhammad Taufik said the group is working towards establishing a third Liquefied Natural Gas (LNG) regasification terminal in the country.

“The needs and demands here in Peninsular Malaysia are indeed growing. We already enjoy gas supply from within and outside of the country in Thailand.

“But in the meantime, demand will outstrip (supply) and I believe in the next four or five years there will be growing dependence on LNG imports.”

Malaysia has two regasification terminals, at Sungai Udang, Melaka and another in Pengerang, Johor.

On a related matter, Tengku Muhammad Taufik said the industry could continue to see further changes moving forward with the incorporation of regulations to reduce carbon emissions through decarbonisation solutions.

These include carbon capture and storage (CCS) and physical decarbonisation initiatives.

At a separate briefing, PETRONAS senior general manager for the carbon management division said its Kasawari CCS project, which aimed to reduce carbon emissions, has a capital expenditure projection cost of about RM4bil.

The project, developed by PETRONAS. Kasawari, is located in the South China Sea, offshore Sarawak.

The CCS project here is expected to capture up to 3.3 million tonnes of carbon dioxide equivalent emitted by flaring at the gas field each year.

“We are targeting to provide about 80 tonnes per annum (in capacity) for CCS. This is inclusive of PETRONAS and Malaysian domestic requirements as well.

“We have the potential to go beyond this, but we need some time to ensure suitability of storage sites and get any capital investments needed,” said PETRONAS general manager for CCS, carbon management division Nor A’in Md Salleh.

Reuters reported that PETRONAS expects to take one to two years to set up a planned joint venture with Italian energy group Eni on upstream assets in Indonesia and Malaysia.

The companies announced a joint venture framework with a pact signed in February that could deliver up to 500,000 barrels per day of oil equivalent (boe), combining about three billion boe of reserves with an additional 10 billion boe of potential exploration upside.

The asset combination focuses on Indonesia’s Kutai Basin, where Eni’s portfolio includes developments in the Northern and Gendalo-Gandang hubs, which hold substantial gas reserves, according to Reuters.