Petronas and ExxonMobil are partners and competitors at the same time

Jun 14, 2004 02:00 AM

Petroliam Nasional (Petronas) is ExxonMobil’s partner in the oil and gas upstream sector but a stiff competitor in the domestic retail services, said ExxonMobil subsidiaries in Malaysia chairman Robert Fisher.
"Obviously, Petronas is a severe but formidable competitor. That is what makes the relations (ExxonMobil/Petronas) interesting. In the upstream, we act as a supplier to them, a partner outside, while being a competitor in service stations. People in our head office know how to work with Petronas in a variety of different ways. This is to reap benefits for both parties," he told.

He said the retail business is becoming very competitive everywhere in the world and Malaysia is no different.
"We still compete to get land sites (for the setting up of petrol stations). Now, it is too challenging to get the sites in Malaysia, like the not-so-smooth land transfer process. However, the future of retail petrol business in Malaysia is still bright provided we can install the stations at the right locations. We will continue to invest in downstream activities," he said.

Fisher also spoke highly of Petronas’ achievements since its establishment as a regulatory authority and full-fledged oil company.
"We think Petronas has made a tremendous stride. From being a regulatory authority, Petronas has done well to become a successful and world class petroleum company, be it in the upstream or downstream sectors of the industry. The company started from scratch and now has become a global oil and gas company. From exploration and production to refining, LNG, petrochemical, you just name it, Petronas has everything. It comes from nothing. That is more of a hard-work story," he said.

In view of this, he added, it is ExxonMobil’s intention to ensure that current business relations with Petronas continue for a long time.
"We (ExxonMobil and Petronas) have been working together for 25 years in Malaysia. We know Petronas’ senior management... we have mutual confidence and respect for each other. We hope to find other opportunities to work together, including in overseas ventures," Fisher said.

He said ExxonMobil has a strong relationship with Petronas in developing the nation’s petroleum resources and this partnership is now being expanded outside Malaysia, the most significant being a joint investment in oil and gas production in Chad.
Called the Chad-Cameroon Integrated Oil development and Pipeline project, Petronas has a 35 % stake in the consortium developing the $ 3.5 bn ($ 1 = RM 3.80) project; ExxonMobil through subsidiary Esso Exploration and Production Chad as the operator 40 %; and Chevron Texaco 25 %. The pipeline, originally targeted for completion this year, extends 1,070 km from the landlocked oil fields in southern Chad to a floating storage vessel offshore Kribi in Cameroon where the oil will be offloaded for export.

Operating in Malaysia for 110 years, ExxonMobil is now the largest crude oil producer in the country and the largest supplier of natural gas in Peninsular Malaysia. The company has a working interest of 60 % of crude oil in Malaysia and 70 % working interest in gas offshore Peninsular Malaysia.
ExxonMobil operates 36 platforms with a daily crude oil production of 280,000 barrels and a daily gas production of 1.3 bn cf. It operates as a contractor to Petronas under the Production Sharing Contract terms.

In downstream activities, which include refining and marketing of petroleum products, ExxonMobil has had a significant marketing presence in the country since 1893 when it first began selling kerosene and then other products.
Esso Malaysia, its subsidiary company listed on Bursa Malaysia, operates a refinery in Port Dickson capable of producing 88,000 bpd. In addition, the company operates 12 fuel terminals and plants and about 570 Esso and Mobil service stations nationwide. Essogas and Mobilgas cooking gas are sold through its network of 540 dealers.

ExxonMobil has a strong market position in chemicals, supplying a portfolio of specialty products such as fluids, plasticisers, butyl rubber, resins, plastics and specialty chemicals. These chemicals are used by manufacturers to make products such as insecticides, paints and varnishes, aerosol sprays, adhesive tapes, inks and even chewing gum.
ExxonMobil has invested more than $ 12 bn in Malaysia over the last 25 years. The capital investments, annual expense budgets (over $ 300 mm in 2002) and annual cash taxes paid to the Government (over $ 350 mm in 2002) all create benefits that cascade through the local economy. On top of these, ExxonMobil subsidiaries in Malaysia contribute over $ 500,000 to support various community programmes in education, welfare, safety and health, environment and the arts.

Source: Business Times
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