Petronas became the first Asian oil and gas producer to announce, in early November, that it was aiming for net-zero carbon emissions by 2050. But analysts say that without further details about these plans it is too early to draw conclusions over how the NOC’s operations will change in the near term.

Speaking at a company townhall in late October, Petronas chief executive Tengku Muhammad Taufik said the firm had an “aspiration” to hit net-zero carbon for its Scope 1 and Scope 2 emissions—those coming from its own production, refining and marketing—by 2050. This brings it roughly into line with European majors such as Shell, Total and BP as well as IOCs such as Spain’s Repsol, although some have also made commitments regarding Scope 3.

Taufik went on to outline a number of broad areas where Petronas could cut its carbon emissions, including use of carbon capture, carbon sinks, developing zero-carbon fuels and improving the ­efficacy of its renewables portfolio—but he stopped short of making ­specific ­pledges.

Petronas produces c.1.8mn bl/d oe. But without more granular information from the company on its plans it is difficult to predict how future production levels or capex will be impacted by the net-zero carbon pledge, according to Liaw Thong Jung, oil and gas analyst for locally based investment bank Maybank Kim Eng.

“It is a good start for Petronas and, despite the wording, it is definitely a firm commitment. But we would like to see more clarity on how they are going to achieve that 2050 pledge—because so far they have not revealed any targets on how they achieve that sort of ratio. What we want to know is how much Scope 1 or Scope 2 emissions it plans to reduce over a one, five or ten-year time frame? Currently that level of detail is missing,” he says.

Liaw’s view was backed by a research analyst at a local bank in Malaysia, which says that the 2050 ambition was a “blanket statement” with the main immediate impact of stimulating discussion over how Petronas could evolve into a net-zero carbon company.

Petronas is the sole custodian of Malaysia’s oil and gas assets and could face difficult decisions in reconciling its net-zero carbon ambitions with its current asset portfolio, according to Liaw. However, the analyst says it is unlikely the state-owned firm would make major changes to its energy mix in the near future.

Renewables investment

In the short term, it appears likely Petronas will seek to improve its carbon footprint by adding exposure to renewables rather than tackling emissions from hydrocarbons production.

In July, Petronas’ venture capital arm, Petronas Ventures, invested in Sols Energy, a solar photovoltaic system startup that provides power to homes and SMEs in Malaysia. While in September it acquired 100MW of installed capacity of solar assets in India from Acme Solar, in a deal valued at $109mn.

However, while the move to solar was helpful to Petronas’ net-zero carbon ambition, investment in the sector was still relatively slight relative to the firm’s position as custodian of Malaysia’s oil and gas reserves and fourth-largest exporter of LNG globally.

“Petronas has moved in the direction of solar recently but it still only amounts to less than 50MW in Malaysia itself, which is very small in the context of their broader business—it does not move the needle very much,” adds Liaw.

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Author: Aaron Woolner