Strong Q3 earnings cheer up Petronas

KUALA LUMPUR: Malaysian state energy firm Petroliam Nasional Berhad, or Petronas, yesterday forecast higher full-year earnings for 2017, after posting a 64% jump in third-quarter profit on improved oil prices.

A higher profit would be the second straight year of improved earnings at Petronas, reversing a two-year profit slump with the help of a modest recovery in oil prices and cost-cutting measures.

“Petronas expects the group’s overall year-end performance to be better than last year,” the company said, indicating an improved view of the energy market since August, when it expected its annual performance to be “fair”.

Petronas chief executive Wan Zulkiflee Wan Ariffin said the group remained committed to boosting efficiency across its operations.

“We intend to enhance our efforts to take advantage of the current recovery in oil prices for Petronas to close the year strongly,” he said.

Petronas, like other oil majors, has taken a hit from lower oil prices. Brent crude has fallen sharply since 2014, though it has somewhat recovered this year, trading near a two-year high yesterday.

The company has focused on cutting costs amid expectations that the low oil price environment will continue. Last year it said it would cut spending by up to 50 billion ringgit ($12.2 billion) over the next four years.

Petronas is a key contributor to government coffers: its dividends last year accounted for 7.5% of total government revenue. It is one of the country’s largest employers with a workforce of over 50,000.

Petronas said its profit after tax for the quarter ending September, rose to 10 billion ringgit, compared with 6.1 billion ringgit for the same period last year.

Revenue totalled 53.7 billion ringgit, up 14% from a year ago.

The revenue increase was due to higher prices for major products and a softer ringgit, but it was partially offset by lower sales volumes of crude oil and condensate, it said.

Total production volume for the quarter fell to 2,206 thousand barrels of oil equivalent (boe) per day, down from 2,227 tboe/ day a year ago.

Petronas’ sales volume of liquefied natural gas (LNG) rose by 1% to 7.22 million tonnes in the quarter.

The company, the world’s third-biggest LNG exporter after Qatar and Australia, has been trying to diversify beyond its traditional LNG markets of Japan and South Korea amid a gas supply glut that has sent prices down sharply.

Petronas scrapped a proposed $29 billion LNG export terminal project in western Canada in July and is now focused on its Refinery and Petrochemical Integrated Development (RAPID) project in the southern Malaysian state of Johor.

RAPID, in which Saudi Aramco agreed to invest $7 billion, will contain a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million metric tonnes per year.

“The complex remains on track to achieve ready for start-up status in 2019,’’ Petronas said.