Abu Dhabi: Abu Dhabi-based Mubadala Petroleum will pursue an aggressive cost-reduction strategy as oil prices plummet to record levels due to overproduction and weak demand, the Chief Executive Officer of the company said.
“We are on very aggressive cost reduction mode. Last year and this year we have been focusing primarily on cost reduction and bring cost parameters significantly down due to drop in oil prices,” Mussabeh Al Ka’abi said at an energy forum on Tuesday.
He however, said they are not slashing production and are trying to increase efficiency. “We have currently adjusted our cost to a certain oil price. We are reviewing our operation but have no plan to cut production.”
He did not elaborate whether the cost-cutting will have an impact on its workforce.
The company is also looking for an acquisition and build its portfolio at the current low oil prices. “We are also looking to grow our business. At the current low oil prices, we hope it will create an opportunity for an acquisition and build our portfolio.”
A number of oil companies are slimming down to cope with the slump in oil, whose price has plummeted to its lowest level in 12 years and is not expected to recover significantly for months.
From $115 per barrel in June 2014, oil prices plunged to close to $30 per barrel. The Organisation of the Petroleum Exporting Countries (Opec) in its annual report predicted $70 per barrel oil price for its basket of crude.
BP last week announced that it would cut 4,000 more jobs. California-based Chevron said last year that it would eliminate 7,000 jobs, while Shell announced 6,500 layoffs.
In the UAE, Sharjah-based Dana Gas, Abu Dhabi National Oil Company (Adnoc) and Abu Dhabi National Energy Company (Taqa) have announced that they would be slashing costs as low oil price hit their revenue. Adnoc said it is trying to reduce operational costs by about 25 per cent.
Mubadala Petroleum, a subsidiary of Mubadala Development Company, has operations in Kazakhstan, Vietnam, Thailand, Malaysia, Singapore and Indonesia in Asia. It is also active in Oman, Bahrain, Qatar, Libya and Tanzania.
“In Thailand, we are involved in three fields and have become the second-largest crude oil producer. In Malaysia, we have successful collaboration with Petronas. We are satisfied in Indonesia with our gas production and in Vietnam we are aggressively pursuing our project,” Al Ka’abi said about the company’s projects in South East Asia.
The company is also cementing its relationship with China National Petroleum Corporation (CNPC). It signed a non-binding collaboration agreement with state-owned firm in December.
The agreement identifies potential areas for collaboration in the upstream oil and gas sector outside of the United Arab Emirates and, more specifically, new and existing projects including onshore conventional projects, offshore projects and LNG projects.
“It is a reflection of growing relationship between the UAE and China. China is also increasing their footprint in the UAE and signed a concession agreement with Adnoc. It is a growing relationship and we are looking forward to opportunities,” he said.
Mubadala Petroleum was established in 2012 and manages assets and operations spanning 11 countries with a primary geographic focus on the Middle East, Africa, Central and Southeast Asia.
The production of the company is averaging about 400,000 barrels of oil equivalent per day.
