Petronas Posts Lower Profit as Energy Prices Drop

Source: Petronas
Source: Petronas

Malaysia's Petroliam Nasional Berhad (Petronas) will focus on bolstering its capital position to deal with increasing volatility in the energy market and "restrictive" access to financing, the state oil firm's chief executive said on Wednesday.

Petronas posted a 29% drop in second-quarter profit, in line with oil majors such as Chevron, Exxon Mobil and Shell.

Energy prices have fallen from highs hit following Russia's invasion of Ukraine a year and a half ago.

The company's profit for the April-June quarter fell to 16.4 billion ringgit ($3.53 billion) from 23 billion a year earlier. Revenue fell 13.4% to 79.9 billion ringgit.

CEO Tengku Muhammad Taufik Tengku Aziz said oil and gas prices will continue to remain volatile amid a global slowdown and what he called an "uncompromisingly uncertain" macro environment.

He expects Brent crude to trade between $70 and $80 per barrel for the rest of the year, lower than Wednesday's price of around $86.

"It has become evidently clear that in order to address the headwinds in the near term and the structural changes in the long term, we must have more funds and liquidity available on hand," he told a news conference.

The CEO said access to external financing was getting increasingly difficult due to financial institutions prioritising sustainable projects, forcing Petronas to rethink its capital strategy and build its cash reserves for growth.

Dividends to Petronas' sole shareholder, the Malaysian government, will depend on "affordability", Chief Financial Officer Liza Mustapha said.

Petronas will pay a dividend of 40 billion ringgit this year, she said, down from last year's 50 billion.

Petronas – the world's fourth-biggest LNG exporter - said it will increase investment in its core business, even as it aims to lower emissions and invests in cleaner energy.

Tengku Muhammad Taufik said Petronas is keen to proceed with the second phase of LNG Canada, a Shell-led LNG export project in British Columbia in which it is a partner.

Petronas will close a portion of the Sabah-Sarawak gas pipeline on the island of Borneo following a leak caused by soil movement last year and the declaration of force majeure on gas supply to one of its liquefaction terminals, the CEO said.

The force majeure has not affected deliveries to customers, he said.

(Reporting by A. Ananthalakshmi; editing by Kanupriya Kapoor and Jason Neely)

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