Asia’s oil demand recovery remains fragile

The recovery in Asia’s demand for oil remains fragile despite the reopening of economies across the region. As the second wave of coronavirus outbreaks could hit consumption again, the outgoing head of Malaysia’s Petronas said.

“We really had a collapse these past few months, but are seeing signs of opening. From the economies,” Petronas’ CEO Wan Zulkiflee Wan Ariffin said during a conversation with IHS Markit’s Daniel Yergin on Monday.

“But … the recovery is fragile,” he said, in what’s likely his last interview as head of 1 of Southeast Asia’s largest energy majors.

Energy affordability has become a priority for several governments. Wan Zulkiflee said because the pandemic cut disposable incomes.

Asia’s demand for oil remains fragile

“When demand collapsed, our inventories were arising, logistics were affected. Customers weren’t taking products and essentially, we had issues on all fronts,” he said.

“This is additionally once we adopted the philosophy of ‘you produce only what you’ll sell’.”

Petronas cut crude and LNG exports in the second quarter. The company is exploring ways to adapt to the “new normal”, said Wan Zulkiflee. Who is stepping down at the top of June?

“Some changes are here to remain. The way customers are going to behave within the future will be very different, and also the way the workforce, our staff, expectations of the workforce, are going to be very different as compared to before this crisis,” he said.

The increase in online interaction as a result of the crisis could change. The longer-term leadership attributes required by the company’s staff, 55 percent of whom are now under 35, he said.

At the end of the day, oil and gas will remain the dominant contributors to its energy mix, although Petronas is stepping up renewables and specialty chemical investments.

“In this a part of the planet we cannot run far away from solar,” he said. Petronas has allocated about 7 percent of its 2020 cost in renewables.

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