Higher crude prices help Petronas’ earnings

Group CEO says the O&G operator also recognised lower impairments


Petroliam Nasional Bhd (Petronas) posted an almost 64% rise in earnings for the third quarter ended Sept 30 this year (3Q17), as the global crude oil price recovery and significantly less provisions helped the state-owned energy company.

Net profit rose 63.5% year-on-year (YoY) to RM9.96 billion, while revenue improved 14.2% to RM53.68 billion.

Petronas said the profit improved in tandem with the increased turnover, due to the higher average realised prices for major products and foreign-exchange gains.

The oil and gas (O&G) operator also recognised lower impairments — which were partially mitigated by the higher tax expenses, product costs and amortisation of O&G properties.

Revenues for the first nine months jumped to RM161.83 billion, a 15% YoY increase.

Net profit for the same period more than doubled from RM12.49 billion in the 2016 financial year to RM27.31 billion.

“We remain committed to improving efficiency across our operations, and will continue to focus on our transformation initiatives which have produced tangible results,” Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin (picture) said in a statement yesterday.

“We intend to enhance our efforts to take advantage of the current recovery in oil prices for Petronas to close the year strongly.”

However, the national energy player remains conservative on the industry’s outlook in line with the modest recovery in oil prices.

The upstream segment recorded higher revenue and profit due to the improved average realised prices and lower net impairment, despite production volume that declined.

Total production volume and entitlement for the period declined 1.7% and 1.1% respectively, due to lower output from Iraq and Canada, coupled with higher decline rates in Egypt.

Production volume for the nine months stood at 2.3 million barrels of oil equivalent (boe), while production entitlement was at 1.74 million boe.

Petronas had announced its intention to sell its entire 30% stake in the Majnoon oilfield in Iraq. The energy firm also put several of its Alberta based Canadian assets on sale.

Meanwhile, the downstream business remains the focus for the company in the near- to mid-term, with Petronas’ RM12.5 billion in capital investment for 3Q17 mainly directed to the Refinery and Petrochemical Integrated Development in Johor — the company’s largest downstream investment in Malaysia.


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