KUALA LUMPUR (May 18): Petroliam Nasional Bhd's (Petronas) president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin finds that mergers may be the way to go for some oil and gas companies which are facing headwinds from fallen crude oil prices.

During the 18th Asia Oil & Gas Conference 2015 (AOGC2015) CEO Strategic Dialogue today, Wan Zulkiflee said that as the industry landscape become increasingly uncertain, "merging may be the best way forward for some" companies.

He noted that industry players are taking steps in joining hands to consolidate their operating assets and technology expertise which have been made through mega mergers.

"While mergers come with their own risk, returns can be rewarding if the bets are called right ... At the end of the day, companies that have survived this industry cycle may come out more prepared and resilient for future challenges," he said.

Separately during his keynote speech during the opening ceremony of 18th AOGC2015, Wan Zulkiflee noted that consolidation opportunities are clearly plentiful.

"Those with heftier cash reserves and other means to fund acquisitions and who are guided by a clear strategic focus will be able to beat competitors to the negotiating table for winning deals. These manoeuvres will position them ahead of the pack when the oil prices recover."

"In this respect, I feel strongly that Malaysian oil and gas companies must extend themselves to explore consolidation opportunities within the fraternity to increase their competitiveness and position the country's oil and gas industry in good stead when the global market recovers," he said

He added that following the repercussions of the oil price drop, there are opportunities that have presented themselves as companies take the effort to ensure that processes and cost structures are re-designed for simplicity and to support long-term lower operating costs and higher efficiency.

"This in fact, should be expanded beyond individual organisations through collaborative measures to tackle the issue in wider spheres of influence.

"I firmly believe that the industry must respond in a cohesive manner to make tangible impacts to lower costs and drive up efficiency levels," he said.

Wan Zulkiflee added that there is still room for optimism "within the gloom and doom".

"I would like to call upon players in the industry to interpret the current scenario through the lens of an optimist; we are now in the mode of realising opportunities amidst challenges, to initiate reforms into our economies, build capability for our workforce and explore new ways to increase competitiveness."