Higher oil div­i­dend for govern­ment

Stronger crude prices en­able Petronas to pay RM24­bil

The Star Malaysia - StarBiz - - Front Page - By INTAN FARHANA ZAINUL in­tan­zainul@thes­tar.com.my

KUALA LUMPUR: Na­tional oil com­pany Petro­liam Na­sional Bhd (Petronas), which saw its net profit in the sec­ond quar­ter al­most dou­bling, has raised its div­i­dend pay­ment to the Govern­ment to RM24­bil.

Petronas had ear­lier guided to pay RM19­bil in div­i­dends to the govern­ment this year.

Pres­i­dent and group chief ex­ec­u­tive of­fi­cer Tan Sri Wan Zulk­i­flee Wan Ariffin said at Petronas’ mid-year re­sults brief­ing that the div­i­dend pay­ment was 50% higher than last year’s pay­out of RM16­bil, thanks to higher global crude oil prices.

“Petronas’ re­sults also demon­strated the out­come of our con­tin­u­ous busi­ness im­prove­ments and im­proved oper­a­tional ex­cel­lence across the group,” he added.

For the sec­ond quar­ter ended June 30, Petronas saw its profit af­ter tax al­most dou­bling to RM13.63bil from RM7.06bil last year, driven by its cost-cut­ting mea­sures and higher oil prices.

Rev­enue for the quar­ter in­creased 14.7% to RM59.3bil from RM51.6bil pre­vi­ously.

Cu­mu­la­tively, for the first half of 2018, Petronas posted a 54% surge in profit af­ter tax to RM26.65bil from RM17.35bil a year ago.

Petronas ex­ec­u­tive vice-pres­i­dent Datuk Man­har­lal Rati­lal said dur­ing the first half, the av­er­age crude oil price was at US$70.56 per bar­rel, com­pared to US$51.8 per bar­rel a year ear­lier.

Cu­mu­la­tively, for the first half of 2018, Petronas saw its rev­enue ris­ing by 8% to RM117.16bil from RM108.15bil.

Wan Zulk­i­flee said that the cap­i­tal in­vest­ment for the first half was RM19.8bil, which was mainly for its in­vest­ment in the down­stream at the Pengerang In­te­grated Com­plex (PIC) in Jo­hor.

He said that the PIC project was pro­gress­ing as planned, which was about 93% com­pleted.

He said Petronas planned its cap­i­tal ex­pen­di­ture (capex) based on the av­er­age oil price of “slightly be­low” US$73 per bar­rel for this year and US$66 per bar­rel in 2019.

Petronas has tar­geted be­tween RM50­bil and RM55­bil of an­nual capex. How­ever, for this year, Wan Zulk­i­flee said it is ex­pected to be slightly be­low RM50­bil.

For its op­er­a­tion in Malaysia, Petronas ex­ec­u­tive vice pres­i­dent and chief ex­ec­u­tive of­fi­cer of up­stream Datuk Mohd Anuar Taib said that there would be a slight pick-up in capex.

“I think there would be a mod­est in­crease in oil and gas (O&G) ac­tiv­i­ties in Malaysia,” he said.

For this year, he said Petronas had ear­marked about RM12­bil of capex for up­stream ac­tiv­i­ties, and be­tween RM14­bil and RM15­bil for 2019.

“We have in the past few months been get­ting some of the projects to be ap­proved and there will be more ex­plo­ration work to be done,” he said.

“While we take ad­van­tage of oil prices, we also have to be cog­nisant of any sud­den in­flux in ac­tiv­i­ties that could put stress on the sup­ply chain, and what comes with the stress on the sup­ply chain would be more cost, such as daily char­ter rates,” Anuar said.

Petronas said to­tal up­stream out­put in the first half of 2018 was 2.38 mil­lion bar­rels per day of oil equiv­a­lent, com­pared with 2.34 mil­lion in the same year-ago pe­riod, mainly due to higher liq­uid pro­duc­tion from in­ter­na­tional as­sets.

“We will also en­deav­our to pur­sue growth op­por­tu­ni­ties to en­sure Petronas’ long-term sus­tain­abil­ity.

“We’ve got world-class as­sets in Canada, we will be there for the long term. We are look­ing at var­i­ous ways to mon­e­tise it,” he said.

For its Canada ven­ture, Wan Zulk­i­flee said that Petronas was tar­get­ing to fi­nalise its in­vest­ment de­ci­sion on the de­vel­op­ment of the liq­ue­fied nat­u­ral gas (LNG) plant “in the next com­ing months”.

Petronas bought a 25% stake in the LNG project in Kiti­mat, Bri­tish Columbia, Canada in June this year.

Its part­ners in the project in­clude Shell Canada En­ergy (40%), PetroChina Canada Ltd (15%), Di­a­mond LNG Canada Ltd (15%), a sub­sidiary of Mit­subishi Corp, and Korea Gas Corp unit Ko­gas Canada LNG Ltd (5%).

This is an about-turn of an event for the na­tional O&G com­pany, which in July 2017 had scrapped plans to invest in the C$36bil (RM111.5bil) Pa­cific North­West LNG gas pipe­line project in Bri­tish Columbia, Canada, due to pro­longed de­pressed prices and un­favourable mar­ket con­di­tions for the en­ergy in­dus­try then.

Strong Q2:Wan Zulk­i­flee (left) speak­ing at Petronas’ mid-year fi­nan­cial re­sults an­nounce­ment in Kuala Lumpur. Look­ing on are Petronas chair­man Datuk Ah­mad Nizam Salleh (cen­tre) and ex­ec­u­tive VP and CEO Down­stream Datuk Md Arif Mah­mood.

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