Petronas: No spike in upstream capex
Group to invest RM 26bil in 2018, slightly higher than last year
KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) raises its capital expenditure (capex) for upstream exploration to RM26bil this year – but only slightly – as it aims to maintain a “tight fiscal discipline” within its operations.
Executive vice-president and upstream chief executive officer Datuk Mohd Anuar Taib said the capex allocation is slightly higher than last year, albeit “within the same ball park.”
“We want to keep this tight fiscal discipline. What we see is that having that discipline ensures people will do things in an efficient manner,” he said at a briefing in conjunction with the Offshore Technology Conference Asia 2018.
“Our exploration allocation includes things such as drilling wells and acquisition of seismic data,” said Anuar.
He said the national oil company intended to maintain its capex on a consistent level.
“You will not see a huge spike in our spending. I like to keep it consistent. The challenge that we’ve seen in the past is that when every-
body starts taking on a lot of activities at about the same time, then you really have the old supply chain being stretched.
“We need to guide the industry on the level of activities that it has.”
Anuar said Petronas planned to drill between 110 and 120 wells this year.
“That’s what is in the plan. We maintain exploration at maybe 23 to 25 wells in Malaysia. Rig count is in the range of about 11. But we just want to have this capital discipline – certainty of having that consistent working environment.”
Anuar said a key focus of Petronas’ growth strategy, going forward, is to expand its core business.
“We do look at overseas areas as well. Recently, we won six exploration acreages in Mexico, bringing our total to nine. The first stage of acquisition in Mexico has been done. We now need to focus on how to deliver.
“For exploration, it also boils down to what each of the areas bring to the fold. We’re focusing on South-East Asia first – that’s the area that we’re comfortable with. We have lots of experience in this part of the world. We are also looking at the assets that we can develop there with our partners,” he said.
Anuar also said Petronas is looking at ways to monetise its resource base in Canada.
“We used to work on the Pacific NorthWest LNG and we’ve decided not to proceed with that. But if you think about it – Canada, the US – the pipeline gas market there is about 84 billion cu ft per day. That is over 40 times Peninsular Malaysia!
“So, connectivity – being able to connect to the grid – would open up a lot of possibilities. For us, we look at all the options available out there and we’ll make decisions as and when those opportunities occur.”
For its fourth quarter to Dec 31, 2017, Petronas’ net profit increased by 61% to RM18.2bil from RM11.3bil in the corresponding quarter last year due to higher revenue and lower net impairment on assets and well costs.
As a result, earnings before interest, taxation, depreciation and amortisation (EBITDA) was also higher by 15%, at RM25.3bil compared to RM21.9bil in the corresponding quarter last year.
The group’s revenue rose to RM61.8bil, 14% higher compared with the corresponding quarter last year.
This was contributed by improved average realised prices recorded for major products and higher sales volume mainly from liquefied natural gas (LNG) and petroleum products, partially offset by the effect of the firmer ringgit against the US dollar.
For the full year, Petronas’ net profit jumped by 91% to RM45.5bil in 2017, compared with RM23.8bil recorded in 2016.
The increase was achieved on the back of higher revenue, lower net impairment on assets and well costs and continuous efforts to optimise costs in 2017.
The group’s revenue rose by 15% to RM223.6bil compared with RM195.1bil recorded in 2016. The increase was mainly due to higher average realised prices recorded for major products.
This was partially offset by lower sales volume for crude oil and condensate as well as petroleum products.
Cumulative 2017 EBITDA rose to RM92bil compared with RM70.7bil recorded in 2016, in line with higher profits.
Cashflow from operating activities improved to RM75.7bil, an increase of 41% from RM53.8bil in 2016.
Total assets as at Dec 31, 2017 was slightly lower at RM599.8bil compared with RM603.4bil as at Dec 31, 2016, primarily due to the impact of the firmer ringgit against the US dollar.