Higher oil dividend for government
Stronger crude prices enable Petronas to pay RM24bil
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.