Petronas records lower net loss to RM3bil

Wan Zulkiflee: ‘The impairments were taken as part of being prudent despite the higher production of oil.’

KUALA LUMPUR: Petroliam Nasional Bhd’s (Petronas) net loss narrowed to RM3bil for the fourth quarter ended Dec 31, 2015 from RM7.3bil in the same quarter in 2014 due to impairments on assets and the weaker ringgit.

The impairments for the quarter amounting to RM12.9bil was lower compared with the RM19.8bil that was impaired in the corresponding period in 2014.

If the impairments were excluded, then Petronas would have posted a profit of RM9.9bil for the fourth quarter in 2015, down 21% from RM12.5bil a year ago.

In tandem with the low oil price environment, Petronas’ revenue for the fourth quarter in 2015 fell 24% to RM60.1bil from RM79.4bil previously.

For the full year of 2015, Petronas’ profit fell 56% to RM20.8bil from RM47.6bil in 2014 on the back of a revenue of RM247.7bil, which is a 25% decline compared with the previous year.

“The impairments were taken as part of being prudent despite the higher production of oil,” president and group chief executive officer Datuk Wan Zulkiflee Wan Ariffin told a media briefing yesterday.

He said 2015 was an extremely difficult year for the group, as Brent Crude averaged US$52.46 per barrel compared with US$98.99 in 2014. Petronas produced 3% more oil for 2015, which is 2,290 barrels of oil equivalent per day due to new production streams from Malaysia, Indonesia and Aizerbaijan.

Despite the higher output, Petronas’ cash flow from operations dropped 33% to RM69.6il from RM103.6bil in 2014. This is due to the lower average selling price.

While the profits for Petronas’ uptream business in 2015 fell 64% to RM19.6bil from RM53.7bil in 2014, its downstream business performed well.

The downstream business registered a 60% rise in profit to RM9.3bil from RM5.8bil in 2014 due to higher margins from low feedstock prices.

“The downstream business’ result was attributed to the realisation of post-acquisition synergies at the Malacca Refinery, Petronas Gas Bhd’s transformation, cross-business plant performance improvement, as well as cost-saving initiatives across Petronas’ global lubricants business,” Wan Zulkiflee said.

Moving into 2016, Wan Zulkiflee said that Petronas anticipated its financial performance to continue to be affected by the prolonged volatility in oil prices, and that it would intensify its efforts to cushion the impact to remain competitive and sustainable.

He noted that for this year, Petronas has projected Brent crude to average at US$30 per barrel, which is 43% lower compared to the US$52.46 per barrel average in 2015. Yesterday, Brent oil was trading at US$35 a barrel.

Wan Zulkiflee said Petronas would maintain its oil production rate at the same level as last year and is likely to go higher.