PETALING JAYA: Petroliam Nasional Bhd (Petronas) is determined to continue delivering operational excellence and growth strategies for 2020, despite projecting the year ahead to be fraught with numerous challenges arising from the Covid-19 outbreak.
Petronas chairman Datuk Ahmad Nizam Salleh said the pandemic has plunged many nations into a new dimension of social, economic and commercial aftershocks.
“Although the oil and gas industry is accustomed to volatility and shocks, there is no precedent in recent history in dealing with the demand contraction resulting from the new global crisis. The year ahead is seriously uncharted, ” he said in the national Malaysian energy conglomerate’s annual report.
“The challenge we face in this unfamiliar territory will require us to be more agile and to build the capabilities needed to succeed, ” Nizam said.
In light of the current uncertainty, former president and group chief executive officer Tan Sri Wan Zulkiflee Wan Ariffin said Petronas has taken early measures to safeguard the well being of its people through the implementation of several proactive steps to manage the risk of exposure and reduce the risk of transmission of the virus.
“In terms of our businesses, we are ensuring that our operations continue to run safely and efficiently across the value chain. We will continue to monitor the developments of these external events and strengthen our resiliency as well as future-proof the organisation to preserve our long-term sustainability.
“Our focus will be on the elements that are within our control which include strengthening our financial position, driving further efficiencies and cost optimisation efforts across the group.”
Meanwhile, Petronas executive vice-president and group chief financial officer Tengku Muhammad Taufik said the outlook for the oil and gas industry remains bearish, given the ongoing geopolitical uncertainties, prolonged trade tensions and near-term demand disruptions due to the Covid-19 health crisis.
“Amid slumps in prices and demand caused by the Covid-19 pandemic as well as oversupply in the market, Petronas will continuously re-evaluate our capital expenditures as part of ongoing efforts to strengthen our resiliency in facing the greater uncertainty of the global markets moving forward.”
Petronas recorded lower revenue of RM240.3bil in 2019, a decrease of 4% from 2018, on the back of lower average realised prices for its major products. This was partially offset by higher sales volumes for petroleum products and liquefied natural gas (LNG) as well as the favourable effects of the weakening ringgit against the dollar, according to its 2019 annual report.
In tandem with the lower revenue, earnings before interest, tax, depreciation and amortisation fell by 17% to RM96.3bil in 2019 from RM116.5bil in 2018. The group’s profit after tax consequently decreased by 27% to RM40.5bil in 2019, primarily attributed to lower commodity prices and net impairment on assets.
Operationally, upstream production volume in 2019 grew to 2.4 million barrels of oil equivalent per day, an increase of 2% from 2018. This was contributed by higher liquid production from international operations and higher natural gas production in Malaysia.
Downstream recorded an overall petrochemical production volume of 10.4 million tonnes during the year. This was delivered on the back of strong plant performance and reliability, with assets recording an overall equipment effectiveness of 90.6% across all business segments, the report said.
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