Petronas profit plunges 85% on low global oil prices

The Myanmar Times - - International Business -

MALAYSIA’S state en­ergy firm Petronas said prof­its plunged 85 per­cent in the sec­ond quar­ter due to low oil prices, adding to concerns about the coun­try’s slow­ing econ­omy.

Petronas, Malaysia’s only For­tune 500 com­pany and the largest source of gov­ern­ment rev­enue and na­tional ex­port earn­ings, re­ported a net profit of 1.62 bil­lion ring­git (US$402 mil­lion) for the sec­ond quar­ter, down from 11.07 bil­lion ring­git over the same pe­riod last year.

Rev­enue was 48.44 bil­lion ring­git, 21pc lower than the same pe­riod in 2015. The firm said it ex­pects to be im­pacted by “volatil­ity in oil prices” for the rest of the year.

“De­spite a mod­est re­cov­ery in crude oil prices, un­cer­tain­ties re­main due to per­sis­tent over­sup­ply and slug­gish de­mand out­look,” it said in a state­ment.

En­ergy-ex­port­ing Malaysia has the third-largest econ­omy in South­east Asia, but has been grap­pling with fall­ing oil prices and weak over­seas de­mand for the com­mod­ity – dent­ing rev­enues and putting se­vere pres­sure on the econ­omy and lo­cal cur­rency.

The coun­try has also been rocked by a mas­sive fi­nan­cial scan­dal amid al­le­ga­tions that bil­lions of dol­lars were stolen from a state in­vest­ment fund founded and over­seen by the prime min­is­ter.

Fig­ures ear­lier this month showed the econ­omy grew 4pc yearon-year in the April to June pe­riod – its slow­est rate of ex­pan­sion since a 1.1pc con­trac­tion in the third quar­ter of 2009 dur­ing the global fi­nan­cial cri­sis then.

In July, Malaysia un­ex­pect­edly cut in­ter­est rates for the first time in seven years.

Oil prices en­tered a “bear” mar­ket at the start of the month on over­sup­ply concerns, fall­ing more than 20pc and clos­ing be­low $40 a bar­rel for the first time since April.

The com­mod­ity re­bounded last week on hopes pro­duc­ers might de­cide to freeze out­put at a meet­ing next month, but an­a­lysts have voiced doubts that a deal will be reached.

Photo: EPA

The Petronas Twin Tow­ers in Kuala Lumpur. The Malaysian com­pany is ex­pe­ri­enc­ing a rough patch as oil prices tum­ble, lead­ing prof­its to plunge 85 per­cent in the sec­ond quar­ter.

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