Higher dividend from Petronas?

KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) chairman Tan Sri Mohd Sidek Hassan said the national oil company might be able to review the amount of dividend it pays the government following the increase in Brent crude oil prices.

Petronas’ dividends have been trending down since 2014 following the sharp drop in crude oil prices which came down from a high of US$120 per barrel in July 2014 to less than US$30 per barrel in January last year.

“We will when it happens, if it happens. The government is responsible and has budgeted certain amounts and that’s it. However if things change, it can be done,” Sidek said on the possibility of a review in dividend to the government.

Petronas has committed a RM13bil dividend commitment to the government this year, its lowest since 2007. Last year, the state-owned oil and gas company paid RM16bil dividend to the government, representing an almost 40% drop from RM26bil paid in 2015 due to the prolonged oil price slump and oversupply in the global crude market.

Petronas used to pay the government RM30bil in the past.

Socio-Economic Research Centre executive director Lee Heng Guie noted that Petronas’ contributions in terms of dividend to the government has been on a declining trend because of the direction of the price of crude oil.

In Budget 2017, the Finance Ministry benchmark the oil price at US$45 per barrel and oil prices are now trading around US$55 per barrel.

From the record high of US$145.29 per barrel in July 2008, oil prices then went into a free fall, hitting a low of US$26.21 in mid-February 2016. The international benchmark West Texas Intermediate was last traded at US$53.66 a barrel while Brent crude oil was traded at US$56.54 per barrel.

“It will be good news if Petronas could increase its dividend should oil prices stay in that level.

“If oil prices remain firm, there’s stronger justification for Petronas to up its dividend,” Lee said.

In addition, he said a potentially higher oil related revenue would provide the government with some flexibility to manage budget deficit as revenue was affected by continued economic conditions.

Lee said it could also provide addition petroleum income tax for the government if oil prices were higher than expected.

Meanwhile, Petronas said it was open to moving the site of its planned RM91bil liquefied natural gas (LNG) terminal in British Columbia, after three years of battling Canadian environmentalists, regulatory reviews and now the debating point of a provincial election.

Sidek said the company was looking into concerns raised by Canadian environmental groups and politicians, who claim the terminal would be built in a sensitive marine area.

“We have to take into account various factors and where it warrants, we will do it (move the terminal),” he told reporters after attending the Malaysian Economic Association’s forum on public sector governance.

The project, in the west of Canada, has become a point of contention in the upcoming British Columbia election, with the province’s opposition New Democratic Party leader John Horgan vowing to move the terminal to “a better place” should he win the premiership, calling the current plan “poorly sited”.

He has suggested the terminal be moved to neighbouring Ridley Island, according to Bloomberg. Petronas reportedly was also considering the island, the report said.

Horgan is up against British Columbia’s Liberal Party’s Christy Clark, who previously won after promising to create a US$100bil prosperity fund on LNG revenue.

The report said the terminal was opposed by environmentalists, scientists and local indigenous communities as it could disrupt a critical salmon migration area.

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