Prolonged weakness in oil price and moderate demand recovery impacted by the Covid-19 pandemic continue to pose challenges to the industry
by NUR HANANI AZMAN / pic by BERNAMA
PETROLIAM Nasional Bhd (Petronas) expects its performance to remain vulnerable to the volatility in energy prices and the ongoing Covid-19 pandemic.
Amid the fluid operating environment, its president and group CEO Tengku Muhammad Taufik Tengku Aziz (picture) said Petronas is adopting a cautious outlook and anticipates the remainder of 2020 will be challenging.
“We remain focused on our deliberate steps to reshape our portfolio, retool our human capital equation and execute at pace in managing the unpredictable business environment as we strive towards our three-pronged growth strategy.
“As we pursue this, our recently announced aspiration to achieve Net Zero Carbon Emissions by 2050 underlines our stronger commitment to sustainability. We are committed to providing cleaner energy solutions through innovative offerings and leveraging on our technological advancements,” he said in a statement last Friday.
Prolonged weakness in oil price and moderate demand recovery impacted by the Covid-19 pandemic continue to pose challenges to the industry.
Despite these challenges, Petronas will remain focused on maintaining portfolio resilience, disciplined capital and operational spending, as well as preserving liquidity to ensure business sustainability.
The national oil company recorded a revenue of RM41.1 billion for the third quarter ended Sept 30, 2020 (3Q20), lower by 25% from RM55.1 billion it made in the corresponding quarter last year, mainly due to lower average realised prices for its major products.
Ebitda stood at RM14 billion, a decrease of 26% year-on-year (YoY), in line with lower revenue and partially offset by lower costs.
Petronas recorded a loss after tax of RM3.4 billion for the quarter compared to the profit after tax (PAT) of RM7.4 billion in 3Q19 primarily due to lower Ebitda, higher impairment loss on assets and higher tax expenses attributed to de-recognition of deferred tax assets, primarily as a result of lower oil and gas prices.
“Excluding impairment loss, the group would record a PAT of RM2.6 billion,” it noted.
Shareholders’ equity observed a decline to RM337.2 billion as at Sept 30, 2020, from RM389.1 billion as at Dec 31, 2019, primarily due to the loss recorded during the period.
Dividends declared to shareholders amounted to RM34 billion whereby RM24 billion dividend payment was based on 2019 financial year’s performance.
The remaining RM10 billion was an additional dividend Petronas approved to support the unprecedented challenges brought about by the Covid-19 pandemic.
Petronas’ upstream division recorded a total daily production average of 2.19 million barrels of oil equivalent (boe) per day, lower than the 2.33 million boe per day recorded in 2019.
As part of the three-pronged growth strategy under expanding core business, Petronas Chemicals Group Bhd (PetChem) recently inked an agreement with LG Chem Ltd to build a nitrile butadiene latex (NBL) manufacturing plant at Pengerang Integrated Petroleum Complex in Johor.
This marks PetChem’s entry into the growing NBL-based product market, creating a new revenue stream and enhancing its presence in the Asia-Pacific region.
The construction of the plant will begin in 2021 with production scheduled to start in 2023.
Upon completion, the plant will have an annual NBL production capacity of 200,000 tonnes and help strengthen Malaysia’s position as the largest exporter of rubber gloves in the world.
Read our earlier report