Petronas sees growth slowdown until 2014

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas), which posted one of the highest ever nine-month results ended Dec 31, forecasts that growth will slow down this year and next due to production issues.

The national oil company, whose new financial year starts from Jan 1 this year from April 1 before, posted a 10.8% rise in net profit to RM55.6bil on higher margins for the nine-month period compared with the previous corresponding period while revenue jumped 26.9% to RM222.8bil due to higher realised prices and improved liquefied natural gas sales volume.

For the third quarter ended Dec 31, net profit fell 34.2% to RM15.6bil compared with a year ago after taking into consideration exceptional gains while revenue rose 30% to RM78bil.

Dividend to the Government was maintained at RM30bil for the nine months, unchanged from the last two years, while the total payments amounted to RM58.4bil.

Petronas president and chief executive officer Datuk Shamsul Azhar Abbas told a media briefing that growth would not be as strong over the next two years because of production issues.

“The nine-month period we announced are exceptional numbers and one of the highest we’ve achieved for any nine-month periods,” he said, adding that the downstream segment (refining and distribution) was the major contributor to revenue.

Shamsul said the financial performance would have been better if not for the 4% decline in production. “We reckon going forward that demand fundamentals are going to be weak and, as far as the domestic side is concerned, we’ll only see an upside in production from 2012,” he said.

Among the ongoing production issues were the problems encountered by Murphy Oil Corp, a Petronas production-sharing contract partner, in Kikeh, offshore Sabah.

Year-to-date, Sabah’s production had declined 17% to 163,000 barrels of oil equivalent per day, Sarawak has gained 3% to 845,000 while Peninsular Malaysia’s production had slipped 11% to 520,000.

Shamsul said the shutdown of oil production ordered by the South Sudan government since late February would have an impact on the bottom line. “The question is when are we going to get back the lost production, which is 80% of our total production when Sudan is included,” he said.

The shutdown was ordered after land-locked South Sudan could not agree to a transit fee with Sudan, from which it seceded last year following a referendum. Petronas’ share of the production amounted to 134,000 barrels per day. Production in Sudan continues at 15,000 to 20,000 barrels per day while production in Egypt has also been disrupted due to political instability.

Shamsul said the fear factor arising from the geopolitical concerns surrounding Iran would not last and that the elevated crude oil prices of recent weeks would come off as economic fundamentals takes over.

“We reckon crude oil to trade from US$85 to US$90 on fundamentals, that is what we planned for our budget this year,” he said.

Shamsul pointed out that President Barack Obama’s recent statement emphasising diplomacy over force had placed downward pressure on prices. The average price last year was US$113 per barrel for Brent crude.

Meanwhile, Shamsul said the compensation to Tenaga Nasional Bhd amounting to RM1bil to help the utility company cope with losses incurred with gas shortages in Peninsular Malaysia was one-off. “The answer is no, we’re not going to continue, this is a one-off,” he said.

Shamsul added that Petronas was awaiting an answer from the Government on the gas-pricing mechanism, for which a meeting was held three weeks ago.

“The new formula will take into account domestic sensitivities. Now it’s up to the National Economic Council, we’re waiting,” he said.

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