Petronas posts RM16.5bil loss

PETALING JAYA: Petroliam Nasional Bhd (Petronas) posted a net loss of RM16.5bil in the first half ended June 30, 2020 due to impairments and weaker oil prices.

The national oil company said this would affect its dividend payout to the government as it reported a net loss, in contrast with a net profit of RM28.9bil a year ago.“Excluding impairment loss, the group would have recorded net profit of RM7.7bil,” it said yesterday.

Its revenue fell by 23%, to RM93.6bil from RM121.1bil a year ago, mainly due to lower average realised prices for major products and lower sales volume mainly from petroleum products, liquified natural gas (LNG) and processed gas.

For the first half of this year, Brent crude average was US$39.73 compared with US$66.02 a year ago.

In the second quarter, Brent crude oil averaged US$29.20 per barrel compared with US$68.83 a year ago.

As for the second quarter, its revenue fell by 42% to RM34bil from RM59.1bil a year ago, while it swung into net losses at RM21bil in contrast with net profit of RM14.7bil a year ago.

Petronas also said that it was impacted by the downward revision of the price outlook due to the current economic landscape and also the growing pace of energy transition.

Its performance reflected the uncertainties faced by the oil and gas industry, compounded by weak demand caused by the global lockdowns and movement restrictions, excess capacity and a fragile outlook for oil prices.

“The accelerated energy transition which sees the push towards a lower carbon economy is also expected to further impact the demand for natural resources,” Petronas said.

At a press conference yesterday, its president and group CEO Tengku Muhammad Taufik Tengku Aziz cautioned that its financial performance for this year was expected to be impacted by the low oil price and weak demand environment.

“The industry continues to operate in a challenging and unprecedented market environment arising from a combination of severe demand destruction due to the Covid-19 pandemic and global market glut,” he said.

Tengku Taufik said Petronas expected oil prices to be between US$50 and US$60 per barrel in the long term.

As for dividends to be paid to the government this year, he said it was likely the company would propose a lower payment.

He also said that Petronas was committed to undertaking all necessary measures in its path to recovery, which would involve reshaping its portfolio mix, retooling its human capital and emphasising focused execution with pace.

Giving the assurance there would not be any retrenchment, he said final deliberations on pay cuts were ongoing.

“Any decision on the matter will be conveyed to our employees first,” he said.

Tengku Muhammad Taufik said Petronas would also shift more attention to its new energy business, where it has more than 50MWp of solar solutions under development, focusing on commercial and industrial customers.Petronas’ wholly-owned subsidiary, Amplus Energy Solutions, has 660MWp of solar capacity under operation and development in India and South-East Asia, with 448MWp commissioned and the balance of 212MWp under development.

It is planning to increase renewable energy output to three gigawatts in four years.
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