AOGC 2017: Driving a new approach
Despite the challenges facing the energy industry, it is well-placed to meet them, AOGC 2017 hears
The oil and gas sector needs to adapt and innovate if it is to survive in a much-changed operating environment, Malaysian prime minister Najib Razak said at the opening ceremony of the 19th Asia Oil and Gas Conference (AOGC 2017).
He highlighted the role that the conference had played in setting the agenda for the industry since it was first held in the 1990s and said that it was just as relevant today as Asian oil and gas firms sought to weather the difficult conditions of recent times and grasp the opportunities that are now opening up.
Strong attendance at this year's event, which plays host to 1,300 delegates from 37 countries and 44 companies, reflects AOGC's continued importance as a forum to discuss these big themes.
"Legacy players will have to work harder and realign their strategic priorities in order to remain relevant and sustainable in the long run," Razak told a packed auditorium.
Despite the challenges, there was optimism that the industry was in good shape to meet the challenges created by low oil and gas prices, the need to compete with renewable energy, reduce its own carbon emissions and cut costs in order to remain relevant.
"To address these new realities the oil and gas industry is driving new approaches to resource development, cost management and technology," he said.
This required greater use of digital technologies and a wholesale restructuring of the industry's supply chain to bring greater efficiencies.
"A strong oil and gas sector can only function well with the support of a robust services sector, and the consolidation of the oil and gas service sector is crucial," Razak said. "In Malaysia, we have already witnessed a number of service sector players responding to the new realities by reorganising their structure and strategies to be more robust and competitive. I hope others will follow suit."
Malaysia's claim to be an innovation hub for the industry has gained added weight with the success of Petronas in bringing the world's first large-scale floating liquefied natural gas facility into operation. The 365-metre long, 1.2m tonnes a year PFLNG Satu reached its operational site on the Kanowit field off Sarawak late last year, a major achievement for Petronas, whose engineers first conceived of the project a decade or so ago. This was marked by an official launch for the facility at the AOGC 2017 opening ceremony.
Petronas's chief executive Wan Zulkiflee told opening ceremony delegates that while PFLNG Satu was a significant achievement for the company, this was not a time for any company to claim first mover bragging rights—the development of PFLNG should be seen as a necessary move at a time when such technological advances were vital for the industry's survival.
There was no room for complacency at Petronas—and the wider industry—despite some signs of an uptick in demand in the upstream sector. He said that with oil prices of $100 per barrel now a distant memory, and future demand getting more complicated to predict, companies needed to evolve. Paralysis was not an option, he said.
This article appeared in the AOGC daily newsletter, produced by Petroleum Economist for attendees of the 19th Asia Oil and Gas Conference held in Kuala Lumpar.