Petronas Posts 29% Drop In Profit In Second Quarter 2023

(DEFENCE SECURITY ASIA) — Malaysia’s Petroliam Nasional Berhad (Petronas) will focus on bolstering its capital position to deal with increasing volatility in the energy market and “restrictive” access to financing, the state oil firm’s chief executive said on Wednesday.

According to the Reuters news agency, Petronas posted a 29% drop in second-quarter profit, in line with oil majors such as Chevron (CVX.N), Exxon Mobil (XOM.N) and Shell <SHEL.L>.

Energy prices have fallen from highs hit following Russia’s invasion of Ukraine a year and a half ago.

The company’s profit for the April-June quarter fell to RM16.4 billion ringgit (US$3.53 billion) from RM23 billion a year earlier. Revenue fell 13.4% to RM79.9 billion.

CEO Tengku Muhammad Taufik Tengku Aziz said oil and gas prices will continue to remain volatile amid a global slowdown and what he called an “uncompromisingly uncertain” macro environment.

He expects Brent crude to trade between US$70 and US$80 per barrel for the rest of the year, lower than Wednesday’s price of around US$86.

“It has become evidently clear that in order to address the headwinds in the near term and the structural changes in the long term, we must have more funds and liquidity available on hand,” he told a news conference.

The CEO said access to external financing was getting increasingly difficult due to financial institutions prioritising sustainable projects, forcing Petronas to rethink its capital strategy and build its cash reserves for growth.

Dividends to Petronas’ sole shareholder, the Malaysian government, will depend on “affordability”, Chief Financial Officer Liza Mustapha said.

Petronas will pay a dividend of RM40 billion this year, she said, down from last year’s RM50 billion.

Petronas – the world’s fourth-biggest LNG exporter – said it will increase investment in its core business, even as it aims to lower emissions and invests in cleaner energy.

Tengku Muhammad Taufik said Petronas is keen to proceed with the second phase of LNG Canada, a Shell-led LNG export project in British Columbia in which it is a partner.

The CEO also said Petronas will close a portion of the Sabah-Sarawak gas pipeline on the island of Borneo following a leak caused by soil movement last year and the declaration of force majeure on gas supply to one of its liquefaction terminals.

The force majeure has not affected deliveries to customers, he said.

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