What Can Be Done to Ensure a Sustainable Future?
Mohammad Faiz Azmi
We are nearing the end of the roundtable. I would like to conclude by requesting participants summarise the most important step that will help to secure sustainability and industry development moving forward.
ExxonMobil EP Malaysia
I would like to take this opportunity to request additional time with PETRONAS and service providers to devise the kind of step changes or proposals required to modify the governance structure of the upstream segment. We all agree that governance should work to represent the best interests of all parties, including local and international players, and so ongoing discussions will help to achieve that goal.
Downturns in this industry are natural. The crucial point is that we, the leading industry representatives, must learn from the past and modify existing policies to overcome the short-term challenges in order to secure sustainable future growth. This includes allowing an element of free market to ensure the best price discovery process, as well as supporting PETRONAS to determine the best formula for retaining local capabilities on a segment-by-segment basis.
Transparency and open channels of communication are vital because they facilitate planning. Flexibility is also crucial in order to generate tangible new ideas and it is important that PETRONAS and the IOCs engage more with their contractors in an effort to boost innovation and cost-cutting measures. An open channel of communication with operators would be useful in this regard, such as the pilot schemes I mentioned, since it would not only save them money, but also help them conceptualise ongoing proposals and switch industry emphasis from large-scale initiatives to the micro level.
I concur with Ernest that the priority is to work with PETRONAS to identify ways to simplify governance. This will help to reduce time to decision-making, foster creativity and promote the distinct cultures of the organisations working to bring value to Malaysia, whether local or international.
Regarding important steps, I want to emphasise how the market info flow is helping to create clearer visibility across the system to allow players to better understand the landscape and to plan accordingly. Our goal is to ensure that as many local players as possible are able to survive the downturn and that this survival process is sustainable. When the party cake is back on the table, we want everyone to enjoy their slice!
Finally, PETRONAS cannot resolve all problems alone and so I would like to make the following request. While efforts are undoubtedly made by PSCs to nurture Malaysian players in-country, they could show their commitment to the development of the national industry by including local players on their projects abroad. This would be a positive way to develop the latter’s expertise and strengthen their chances of surviving and prospering when the market rebounds.
First, I support the calls for more flexible regulation from PETRONAS. Second, ongoing collaboration between international and local companies is crucial, particularly from the side of PSCs and international operators. Moreover, it is a win-win-win situation for all three parties so I urge increased participation in dialogue opportunities, such as this roundtable, in the near future.
Muhammad Zamri Jusoh
All market players share a common interest to deliver successful projects and optimal, efficient production. This requires a solid and sustainable industry, which is why it is particularly important that industry players come together to speak with a collective voice. When that voice is heard beyond the local industry, it is of the utmost importance that it expresses the industry development initiatives and thought processes that are taking place in pursuit of that common interest.
The most important aspect is to find a balance between industry competitiveness and capabilities. In many ways, these two aspects constitute a virtuous cycle because competition is needed to hone capability, while capability is required to achieve true competitiveness. Therefore, both factors must be considered equally. While striking the right balance is difficult and challenging, that is the challenge that we, as industry leaders, must accept.
Looking ahead, it is essential that the Malaysian oil and gas industry progresses from a reactive to a proactive state. This involves realigning our collective mindset to approach challenges in a more organised manner, and then cascading new ideas from the top down, across all levels of all organisations. The key to success here is ensuring that all players understand the importance of the concepts of change engagement, change ownership, accountability and the sharing of information. Embracing this approach will stand the industry in excellent stead, not only in terms of overcoming the current low oil-price environment, but also in contending with the challenges of the future.
Mohammad Faiz Azmi
That concludes the roundtable in which a rich seam of ideas has been generated from a highly positive debate. Thank you all for taking part and I look forward to seeing you all next time.