KUALA LUMPUR: After delivering record-breaking profits and a higher-than-expected dividend of RM50bil in 2022, Petroliam Nasional Bhd (PETRONAS) has warned about a potential “correction” in crude oil prices this year.
While PETRONAS president and group CEO Datuk Tengku Muhammad Taufik Tengku Aziz stopped short of predicting a lower bottom line for 2023, he said the national oil company would continue to exercise prudent financial management and firm discipline in reinvesting.
“Typically, over the next five years, we are looking at US$70 to US$80 (RM315 to RM360 per barrel for crude oil prices.
“But, this year, we are at the lower bound of that (price range). For planning purposes, we still test the scenario of US$40 (RM180) for our upstream business to ensure its robustness,” he told a press conference here yesterday.In comparison, the Brent grade crude oil prices averaged at US$101.32 (RM456) per barrel in 2022, as compared to US$70.91 (RM319) in 2021.
It is noteworthy that the country’s revised Budget 2023 was based on an average crude oil price assumption of US$80 a barrel.
While PETRONAS would remain cautious on the near-term outlook, Tengku Muhammad Taufik reaffirmed the group’s commitment to undertake more capital investments over the next five years.
It has allocated RM300bil in capital expenditure (capex) between 2023 and 2027, which is 43% higher than the RM208.5bil spent between 2018 and 2022.
According to Tengku Muhammad Taufik, the group aims to scale up investments in the core business, while investing in clean energy to future-proof its portfolio.
PETRONAS will be ramping up its exploration programme in the next five years, with a “renewed focus” in Malaysia.
According to Tengku Muhammad Taufik, PETRONAS is becoming increasingly selective in terms of its upstream plays as the group seeks “faster runway to hydrocarbons” and achieve optimal costs.
“We have also committed up to 20% of our annual capex into decarbonisation and energy transition for the next five years. The trajectory of renewable energy spending will grow,” said Tengku Muhammad Taufik.
For the financial year ended Dec 31, 2022 (FY22), PETRONAS reported record-breaking profit after tax (PAT) of RM101.6bil on the back of higher crude oil prices.
The PAT nearly doubled from RM50.9bil a year earlier, enabling it to deliver a dividend of RM50bil to the federal government – its sole shareholder.
Tengku Datuk Muhammad Taufik noted that PETRONAS had made the scheduled RM25bil dividend payments to the government.
“We were also able to distribute an additional dividend of RM25bil, meaning the total RM50 billion last year,” he said.
Meanwhile, PETRONAS’ revenue increased by 51% year-on-year (y-o-y) to RM375.3bil in FY22, mainly due to the favourable price impact for all products aligned with higher benchmark prices
Last year, Brent grade crude oil prices increased by about 43% from 2021.
It is worth noting that the revenue and PAT recorded by PETRONAS in FY22 are the strongest-ever achieved since the oil company was established in 1974.
In FY22, about 74% of PETRONAS’ revenue came from outside of Malaysia, notably 41% or RM154.1bil from exports and 33% or RM124.2bil from international operations.
For the fourth quarter of FY22, PETRONAS registered a PAT of RM24.42bil, some 55.2% higher than the previous corresponding quarter.
Revenue also increased by 37.2% y-o-y to RM94.72bil.
The stronger turnover was achieved on the back of improved average realised prices and volume for major products, coupled with favourable impact from foreign exchange.
In addition to the RM50bil dividend, PETRONAS also contributed RM500mil to the National Trust Fund in 2022, bringing the cumulative contribution to date to RM11bil.
When asked about the dividend payment for 2023, Tengku Muhammad Taufik said it would depend on PETRONAS’ affordability.
“From what we have heard, it (the target) was RM35bil. Obviously the budget speech has now transpired since we last engaged.
“I will go through the necessary governance. We will have to contend with ongoing operations, servicing our debt and reinvestment needs.
“But whether the number is RM35bil or RM40bil, the numbers will needs to go through the new considerations of affordability and solvency as usual,” he added.
Moving forward, Datuk Tengku Muhammad Taufik said PETRONAS will continue strengthening its integrated value chain with a sharper focus on commercial and operational excellence.
The group is focused on the disciplined delivery of its three-pronged growth strategy and net zero carbon emissions by 2050 aspiration, combined with prudent management of its financial commitments and debt obligations.
“PETRONAS has no choice but to future-proof the group to preserve our ability to deliver long-term sustainable value as a national oil company and a global energy player.
“To this end, PETRONAS must remain resolute in providing energy that is secure, affordable and accessible towards uplifting communities and supporting countries to achieve their net zero ambitions.
“PETRONAS is determined to do this steadfastly through stronger partnerships with our stakeholders, partners, local oil and gas services and equipment players and customers across the globe,” he said.