Malaysian state energy firm Petronas is seeing growing demand for gas as the world lifts COVID-19 restrictions and prioritises energy security due to Russia's invasion of Ukraine, its chief of upstream operations told Reuters on Wednesday.
Petronas, the world's fourth-biggest producer of liquefied natural gas (LNG), has seen high demand from Europe, Japan and South Korea since last year, said Adif Zulkifli.
"We are producing the maximum that we can now. There's a lot of requests for more cargoes in Bintulu," said Adif, referring to Petronas' massive LNG complex in the eastern state of Sarawak.
"To increase production is not as easy," because of under-investment in recent years, he said.
The industry's focus has turned to energy security from energy transition after the war exacerbated the supply crunch, he added.
"With the Russian invasion, talks turned to...how do you actually have a much more reliable and affordable supply," he said.
Petronas aims to raise production to 2.7 million barrels of oil equivalent (mboe) per day by 2030 from around 2.2 mboe currently.
Most of the increase will come from Malaysia, with Canada and Argentina also contributing, he said.
Petronas is budgeting to spend an average of 20 billion ringgit ($4.59 billion) annually for upstream activities between 2022 and 2027, Adif said, but added higher costs could temper investments. The firm spent 14.7 billion ringgit last year.
As part of its efforts to achieve net-zero emissions by 2050, Petronas is positioning itself to be the region's carbon capture and storage (CCS) hub.
CCS involves capturing greenhouse gases from industrial processes and transporting them via pipelines to underground sequestration sites. The International Energy Agency says CCS is critical to cut back emissions.
Petronas' Kasawari Phase 2 gas field, which it has said could be the world's largest CCS project when it comes online in 2025, will be able to capture more than 3.5 million tonnes of carbon dioxide (CO2) a year.
Adif said the firm plans to make a final investment decision on the project, located in offshore Sarawak, by next year.
CCS can potentially be a revenue generator for Petronas, he said. "Now CO2 is not a waste, it is a commodity."
Petronas has teamed up with Sarawak Shell, ExxonMobil, South Korean steel maker POSCO, and global shipping company Mitsui O.S.K. Lines to explore CCS opportunities, and has also received interest from Japanese and Korean steel and cement makers.
($1 = 4.3580 ringgit)
(Reporting by A. Ananthalakshmi and Mei Mei Chu; Editing by Kanupriya Kapoor)