‘Business as usual’ for Petronas despite tough outlook

The national O&G giant will remain steadfast in executing its strategies and sustaining operational efficiencies, says president/group CEO


PETROLIAM Nasional Bhd (Petronas) would continue to tackle industry headwinds amid the country’s prevailing political uncertainties.

Petronas president and group CEO Tan Sri Wan Zulkiflee Wan Ariffin said that while the market volatility is expected to persist, the national oil and gas (O&G) giant will remain steadfast in executing its strategies and sustaining operational efficiencies, as well as maintaining fiscal discipline.

“It is business as usual for us. We are focusing on our efforts to address headwinds that the industry is facing,” told reporters at the company’s earnings briefing in Kuala Lumpur yesterday.

The state energy firm, the country’s only Fortune 500 company, has maintained a cautious outlook as oil price volatility is expected to continue in 2020, with prolonged trade tensions and demand disruptions from the Covid-19 outbreak.

Its full-year net profit for 2019 fell 27% to RM40.5 billion, with revenue down by 4% to RM240.3 billion on the oil price slump and a massive RM7.3 billion in net impairment on assets.

The company’s fourth-quarter profit plunged 71% to RM4.1 billion from RM14.3 billion in the same period a year earlier, hit by lower prices.

Turnover for the quarter also fell 8% to RM64 billion from RM69.9 billion in the same quarter the previous year.

Wan Zulkiflee said with growth in oil supply expected to accelerate this year as demand from China weakens, Malaysia is planning to cut output by 15,000 barrels per day at the OPEC meeting scheduled for March.

It was reported that OPEC is planning to extend current oil output cuts until at least June, with the possibility of further reductions if oil demand in China is significantly impacted by the spread of Covid-19.

Petronas is budgeting for an average oil price of above US$50 (RM211) per barrel in 2020.

Despite another challenging year, Petronas is not expected to see any increase in its capital expenditure, which is capped at RM50 billion.

However, Wan Zulkiflee said the domestic market will see a higher allocation of 10% in 2020 with an amount between RM26 billion and RM28 billion.

Meanwhile, the Pengerang Integrated Complex in Johor is now ready to fulfil increasing market demand for various products ranging from petroleum products to specialty chemicals.

In September, cargoes of Euro 5 Diesel and jet fuel achieved its first lifting, while the petrochemical complex saw on-spec polypropylene, linear low-density polyethylene and ethylene glycols being shipped out from its terminal in Pengerang.

Petronas, a major contributor to state coffers, said it is also planning a RM24 billion dividend payment this year to the government, its sole shareholder.

The company paid RM54 billion in 2019, which included a special dividend of RM30 billion.