President and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Kamadjaja Aziz.
KUALA LUMPUR: Petroliam Nasional Bhd (PETRONAS) is determined to continue creating long-term sustainable value for its shareholders besides providing energy security reliably amid the current challenging operating environment.
Lower energy prices, higher costs and tax expenses as well as foreign exchange impact saw the national oil company posting a 32% or RM25.6bil drop in net profit to RM55.1bil for the financial year ended Dec 31, 2024 (FY24) compared with RM80.7bil in FY23.
Revenue for the period fell by 7% on-year or RM23.6bil to RM320bil primarily due to discontinued operations impact of RM23bil, while softer energy prices were offset by higher sales volumes, the company noted in a statement yesterday.
President and group chief executive officer Tan Sri Tengku Muhammad Taufik Tengku Kamadjaja Aziz said the group would strengthen its core hydrocarbons business while accelerating new businesses as it works on managing emissions across its integrated energy model.
“Last year was defined by unrelenting geopolitical instability that has reshaped the operating landscape, that I will argue, permanently.
“As we face this daunting landscape, the radical changes in policies and material shifts in priorities have redefined what we understood to be cyclical markets,” he told a press conference here yesterday.
Tengku Muhammad said PETRONAS would be disciplined in exercising prudent financial management and careful capital allocation.
“We do this to ensure we can reinforce the resilience and sustainability of our entire portfolio amid extraordinary volatility and uncertainty in the operating environment, which has prompted a wave of rationalisation, optimisation, even U-turns in strategy across the industry throughout 2024,” he said.
In FY24, the average crude oil price dipped to US$81 per barrel compared with US$83 per barrel in FY23, while liquefied natural gas (LNG) prices also eased to US$11.90 per Metric Million British thermal units (MMBtu) in 2024 from US$13 per MMBtu in 2023 due to ample stock levels held by buyers from European markets.
Tengku Muhammad added that refining margins dropped 40% since 2023 due to weak demand growth in transport fuels and an increase in refining capacity that has raised the supply of petroleum products.
The chemical segment saw one of the lowest spreads in nearly two decades due to high costs, overcapacity and slow demand.
Cash flows from operating activities were at RM102.5bil in FY24.
Capital investments amounted to RM54.2bil mainly from upstream’s development and production activities.
Total assets of the group decreased to RM766.7bil in FY24 from RM773.3bil as of Dec 31, 2023, mainly due to lower net cash and funds and other investment balances and disposal of subsidiaries. Shareholders’ equity totalled RM451.2bil.
PETRONAS has proposed to pay a dividend of RM32bil to the government in FY24 as compared to RM40bil in FY23.
FY25 should see PETRONAS’ top line being supported by sustained production levels while its new LNG facility in Canada and petrochemical hub in Pengerang, Johor, would likely start commercial operations.
Tengku Muhammad said PETRONAS’ Canadian LNG facility would not be impacted by the threat of US tariffs as its offtake is destined for Asian markets.
Capital spending in FY25 will remain in the RM50bil range with an equal amount spent locally and abroad, although the amount could change in the favour of the latter in the years ahead as the company builds its portfolio.
According to Tengku Muhammad, the global demand for energy is picking up, prompted by a breakout year in generative artificial intelligence, which was accompanied by a wave of reindustrialisation across the globe.
“To serve the growing needs, PETRONAS will continue to maintain a robust exploration portfolio globally, with a focus on producing low-cost, low-emission resources, while simultaneously doubling down on our decarbonisation and our carbon capture and storage efforts,” he said.
In 2024, the group registered some notable achievements including final investment decisions across 17 projects and 19 oil and gas discoveries in Malaysia and internationally.
In the country, it awarded 14 production sharing contracts while expanding its international portfolios in Indonesia, Papua New Guinea and Abu Dhabi to ensure long-term security of supply.
“We are a gas company and we expect the demand for gas and LNG to remain resilient over the long term.
“We increasingly believe gas is well-positioned as a destination fuel and it will play a critical role in helping many countries meet their low-carbon aspirations as they pursue economic growth.
“We are one of the largest LNG producers in the world and committed to ensure the gas and LNG we produce can flow safely and reliably for the security of our customers,” he added.
PETRONAS’ renewable energy business under Gentari, added over 5GW of capacity in its renewable portfolio during the year, making it a total of 8GW, with 3GW already installed and the remaining 5GW under construction.
It commissioned its first wind turbine of 200MW in India and also secured a 400MW utility-scale wind-solar hybrid project in the same country in the year.
Apart from the RM32bil dividend, PETRONAS also paid RM26.8bil in tax including state sales tax and duties, RM13.1bil for cash payments and RM500bil towards the National Trust Fund in FY24.
Tengku Muhammad said the group would reorganise its operations to ensure sustainability.
“We will need to undergo a period of transformation and cost rationalisation, including reshaping our portfolio. This will result in a restructuring and right-sizing of our workforce.
“The measures are envisaged to better position PETRONAS to ensure we come out of the transformation as a fit-for-purpose, sustainable and agile organisation that can remain competitive for the next 50 years,” he said.
This exercise would include layoffs, expected to begin in phases from the second of half of this year, without the group stating how many employees would be affected. PETRONAS has some 50,000 employees, according to its website.
On the matter of its dispute with the Sarawak state government over resources management in the state, Tengku Muhammad said PETRONAS remained open to working with the state and its oil and gas firm Petroleum Sarawak Bhd or Petros.
“We await the details that are going to be agreed in principle both by the federal government and Sarawak. The current aggregator role is not just commercial, it is also physical.
“I think we will do this carefully. We will want to ensure that the interests of both, as cited by the Prime Minister, federal and state, are held.”
Tengku Muhammad added that PETRONAS “must also be commercial” due to the extensive investment done by the private sector.
“We want to be constructive and cooperative. We want to get to a solution that benefits everyone,” he said.
