PETRONAS Gas Bhd’s (PetGas) net profit for the first quarter (1Q) ended March 31, 2022, slipped 20% year-on-year (YoY) to RM410.6 million from RM516.4 million profit posted a year ago for the same period due to lower utility margins following higher fuel gas price and higher operating costs at its gas processing, transportation and regasification segments.

Revenue for the quarter increased 9% YoY to RM1.45 billion mainly driven by higher revenue from the utilities segment as a result of higher product prices and higher electricity sales volumes recorded, PetGas stated in a filing to Bursa Malaysia today.

Earning per share for the quarter was 20.75 sen and the company declared a first interim dividend of 16 sen per ordinary share.

The group’s gas processing plants revenue increased by 1.1% or RM4.7 million against corresponding quarter following higher internal gas consumption incentive achieved.

Conversely, segment results declined by 4.5% or RM10.9 million due to higher operating costs. 

The group’s pipeline network continued to register close to 100% reliability, comparable to the corresponding quarter.

Segment revenue was comparable at RM288.4 million while segment results decreased by 7.3% or RM14.4 million due to higher operating costs, mainly internal gas consumption cost which is a pass-through cost under Incentive-Based Regulation tariff.

PetGas’ liquefied natural gas (LNG) regasification terminals in Sungai Udang, Melaka (RGTSU), and Pengerang, Johor (RGTP), sustained strong reliability performance at 100% during the quarter.

Segment revenue was lower by 1.1% or RM3.7 million, mainly attributable to slightly lower LNG reloading fee at RGTSU.

Segment results declined by 11% or RM21.6 million as a result of higher operating costs, largely attributable to higher internal gas consumption cost which is a pass-through cost under Incentive-Based Regulation tariff as well as higher maintenance costs in line with level of planned activities.

PetGas’ utilities plants achieved a revenue of RM116.9 million, mainly attributable to higher product prices and higher electricity sales volume.

Product prices were higher in line with fuel gas prices, which is based on reference market price. 

With the exception of electricity, utilities product pricing allows for fuel gas costs to be passed through. 

“Electricity sales volume increased following commencement of electricity supply to the grid under the New Electricity Despatch Arrangement from August 2021 onwards.

“Segment results, nevertheless, declined by 71.1% or RM53.2 million attributable to lower margins as a result of higher fuel gas costs,” PetGas noted in its filing yesterday.

PetGas expects to remain resilient despite the ongoing Covid-19 pandemic as the group’s business model and long-term contracts ensure steady revenue streams, particularly for gas processing, gas transportation and regasification business segments.

It added gas transportation and regasification business segments are anticipated to continue contributing positively to the group’s earnings under the Regulatory Period 1 tariffs which is effective until Dec 31, 2022.

“The group’s gas processing segment is expected to remain stable on the back of its strong and sustainable income stream under the second term of the 20-year Gas Processing Agreement effective from 2019 until 2023,” the group added.

The group’s utilities segment contribution may be affected by customer demand and fuel gas price, which is a non-pass-through cost for electricity sales.

The group is now in the midst of finalising the renewal of several long-term contracts for the utilities segment which are to be concluded this year. The renewals are anticipated to have a positive impact to the segment, its filing revealed. — TMR / pic MUHD AMIN NAHARUL