Petronas Plans To Maintain Capex At US$12 Billion

KUALA LUMPUR, June 25 (Bernama) -- National oil company Petroliam Nasional Bhd (Petronas) plans to maintain capital expenditure (capex) for its current financial year ending March 31, 2010, at US$12 billion, president and chief executive officer Tan Sri Hassan Marican said today.

Speaking to reporters after announcing the group's results for the financial year ended March 31, 2009, he said that 60 percent of the amount will be utilised for domestic operations and the remaining 40 percent for international operations.

For the financial year just ended, the group increased its capex to RM44.0 billion from RM37.6 billion.

During the year, the group reinvested 21.1 percent or RM21.9 billion of its profit before taxation, royalty and export duties.

The reinvestment was significantly lower compared to other major oil and gas companies.

However, Hassan said that Petronas sees 35 to 40 percent of its profit as a comfortable level for the reinvestment.

The reinvestment is necessary to ensure the group's sustainable operations and to generate future revenue and profit, he said.

On overseas expansion, Hassan said the group was looking to strengthen its presence in the countries that it was already operating.

As at March 31, 2009, Petronas is involved in various activities along the oil and gas value chain in more than 30 countries worldwide.

Asked about the speculation concerning his successor, Hassan said: "There are always speculations on my successor. I think that question needs to be addressed to the government."

He said that under his employment contract, his term will end in February next year.

-- BERNAMA

Malaysia Petronas says oil industry to stay volatile

KUALA LUMPUR, June 8 (Reuters) - The oil industry will stay volatile even after a price rally towards $70 a barrel, as it is still unclear if the rise is due to the broader economy or a new speculative play, the chief of Malaysia's state oil and gas company said on Monday.

Mohd Hassan Marican said the industry is undergoing a further wave of consolidation, as cash-strapped small- to medium-sized firms sell off assets due to lower margins, and that selected international and state-run oil companies will gain from this.

"It is still uncertain whether the increase is due to the 'green shoots' of economic recovery or due to a new speculative play in the commodities and the weakening of the U.S. dollar," Petronas President and Chief Executive Officer Hassan told the annual Asia Oil and Gas Conference.

"Despite the fragile sense of stability emerging in the market, I believe that we can expect continued volatility in the industry for some time to come, reflecting the ongoing developments in the broader economy."

U.S. oil prices jumped to a seven-month of $70.32 on Friday, before easing below $68 on Monday as the U.S. dollar continued to strengthen from its recent weakness. [O/R]

Oil prices have doubled from the low $30s hit last winter, although many in the industry fret that the rise is not fed by fundamentals but by optimism only.

Hassan said that after nearly a decade of limited spare capacity averaging 2.7 million barrels per day (bpd), spare crude capacity this year is expected to rise to 6.4 million bpd, or about 8 percent of world oil demand.

He urged the industry to continue to develop oil and gas fields without excessive disruption due to adverse market conditions in order to moderate the volatility inherent in the industry cycle. (Reporting by David Chance and Chua Baizhen; Writing by Ramthan Hussain, Editing by Michael Urquhart)

Petronas forms JV with MISC and Mustang Engineering

KUALA LUMPUR, May 15 — Petronas International Corporation Ltd (PICL), a wholly-owned subsidiary of Petronas, has signed an agreement to form a joint-venture company with MISC Bhd and Mustang Engineering Ltd of the United Kingdom.

The company will provide floating liquefied natural gas (LNG) engineering solutions and services worldwide, said Petronas in a statement today.

According to Petronas, the company will also aspire to be a one-stop centre in delivering cost-effective engineering solutions to develop and monetise remote offshore gas reserves, create high-value intellectual properties and offer best practices in floating LNG production storage and offloading project management and operations.

Petronas said the shareholding structure of the company would consist of PICL with 60 per cent of overall shares, follow by MISC 30 per cent and Mustang engineering, ten per cent.

Petronas stated that the partnership with MISC and Mustang Engineering is in line with its aspiration to grow further its leadership position in the global LNG business.

MSC is a marine transportation and logistics service company. Mustang engineering deals with among others, engineering, design, project management, and construction management services to the oil and gas industry. — Bernama

Malaysia Stocks to Fall on Earnings, Dilution, AmResearch Says

By Tien Hin Chan

March 4 (Bloomberg) -- Malaysia’s benchmark stock index may drop another 7.5 percent by year-end to a five-year low as the global recession batters earnings and more companies seek funds from shareholders to boost capital, AmResearch Sdn. said.

The research unit of AMMB Holdings Bhd. cut its year-end target for the Kuala Lumpur Stock Exchange Composite Index to 800 from 850. The gauge is headed for its lowest level since May 26, 2004, as corporate earnings will shrink 7 percent this year, AmResearch strategist Benny Chew wrote in a report today. The index was at 864.44 at 11:59 a.m. local time.

Malayan Banking Bhd. and TM International Bhd. last week sought a combined 11.3 billion ringgit ($3.1 billion) from shareholders to boost capital. The race to “de-leverage” balance sheets by selling additional stock will be led by banks, carmakers, airlines and producers of oil, gas and building material, risking a dilution of equity, AmResearch said.

“The global trend of companies resorting to rights issue has only recently caught on with Malaysian companies,” Chew wrote. This is “due to the belated acceptance of a more prolonged economic downturn and a tougher funding environment, where capital is scarce or competed away.”

Malayan Banking, known as Maybank, has slumped 5.1 percent since it announced the sale of new shares to existing shareholders on Feb. 27. TM International has lost 11 percent since Feb. 26, after its 5.25 billion ringgit rights offer.

“Current valuations would still need to be significantly diluted to reflect growing risk of rights issues,” AmResearch said. “Valuations are already depressed.”

“Risk aversion” also means the price of the stock sale needs to be attractive to entice demand, signaling that the share price discount “would likely be steep,” Chew said.

To contact the reporters on this story: Chan Tien Hin in Kuala Lumpur at thchan@bloomberg.net

Oil prices recover slightly after steep drop

By STEVENSON JACOBS

NEW YORK (AP) — Oil prices swung higher Tuesday, snapping a four-day plunge as investors temporarily halted their frantic selling to see whether the government's sweeping economic bailout can stem a widening global downturn.

Light, sweet crude for November delivery rose $2.25 to settle at $90.06 a barrel on the New York Mercantile Exchange, after earlier trading as high as $93.02.

Prices had lost nearly $13 in the past four trading sessions as a widening economic crisis spreads overseas and undercuts energy demand forecasts.

Despite Tuesday's modest advance, analysts said crude's fundamentals suggest prices are headed lower.

"We've just seen a huge shift in sentiment where the focus isn't on supply anymore. It's on demand, and that demand continues to weaken," said Jim Ritterbusch, president of energy consultancy Ritterbusch and Associates in Galena, Ill.

At the pump, crude's general downward trend continued to weigh on retail gas prices. A gallon of regular fell 2.4 cents overnight to a new national average of $3.48, according to auto club AAA, the Oil Price Information Service and Wright Express. Prices peaked at $4.114 a gallon on July 17.

Crude's modest gains came as investors trickled back into the oil market a day after growing financial worries weighed down markets across the globe. Tensions eased some after the Federal Reserve announced an emergency plan to buy up massive amounts of companies' short-term debt in its latest effort to unclog jammed credit markets.

Still, the initiative, along with the government's $700 billion financial bailout plan approved last Friday, failed to soothe investors worried about a deepening economic malaise. The Dow Jones industrial average fell more than 500 points after advancing slightly earlier in the day. On Monday, the blue chip index fell below 10,000 for the first time in four years.

Meanwhile, oil market investors are looking for signs that the Organization of the Petroleum Exporting Countries may cut production if prices fall further. Iranian Oil Minister Gholam Hossien Nozari on Saturday called on fellow OPEC members not to pump too much oil in a bid to keep prices above $100.

However, OPEC may be reluctant to slash output since higher gasoline and heating costs would be a further drag on economic growth.

"I think it's very difficult for OPEC," said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney. "With the international economy looking weak, decisions to support oil prices have to be balanced against not making the situation worse."

A stronger dollar has also been pressuring oil prices lately. The greenback weakened slightly Tuesday, helping send prices higher. Investors tend to buy commodities like oil to defend against dollar weakness and a hedge against inflation, but sell crude as the U.S. currency strengthens.

The 15-nation euro bought $1.3595 in trading Tuesday, up from the $1.3457 late Monday in New York but still at lows not seen this year.

In other Nymex trading, heating oil rose 3.17 cents to settle at $2.5057 a gallon, while gasoline futures rose less than half a penny to settle at $2.0628. Natural gas for November delivery fell 6.7 cents to settle at $6.768 per 1,000 cubic feet.

In London, November Brent crude rose 98 cents to settle at $84.66 per barrel on the ICE Futures exchange.

Associated Press Writers George Jahn in Vienna, Austria and Alex Kennedy contributed to this report from Singapore.

Petronas posts record profit of $18.1 bil., interested in Iran gas+

AP

Posted: 2008-07-15 05:26:26

KUALA LUMPUR, July 15 (Kyodo) - Malaysia's state-owned oil company Petroliam Nasional Bhd. announced Tuesday a 40.3 percent increase in net profit to a record $18.1 billion for the financial year ended March 31, on the back of higher sales and higher oil prices.

Petronas, Malaysia's biggest and most globalized company, also said it is still interested in Iran's Pars liquefied natural gas project although its partner, Total SA of France, has canceled its investment over increasing political tension.

"We continue to be interested in operating in Iran. Yes, we know the situation there. I have read the announcement by Total, but as Petronas, we continue to be interested in Iran, " Petronas CEO Hassan Marican told a press conference.

Total, which has a 40 percent stake in the Iran's South Pars project, announced last week it would not spend any more money in the project due to political risk as Iran comes under increasing pressure from the United States to halt its nuclear energy program.

Petronas, which holds a 10 percent share, said it would reassess the project's cost structure.

The remainder of the consortium is held by National Iranian Gas Export Co.

"But on the LNG project specifically, where we are in a consortium with Total, I have said previously that we cannot come to a final decision on that particular project because of the increase in cost and because we have not completed our discussion with the Iranians," Hassan said.

Whether Petronas will go it alone on the project, he said: "We are capable and able to undertake the LNG projects but there are other factors. So we have to make an assessment."

The South Pars field holds around 14 trillion cubic meters of gas, about 8 percent of world reserves.

Petronas's aggressive expansion overseas has paid off handsomely for the company.

The group, which also controls several listed units such as shipping firm Malaysia International Shipping Corp. Bhd., retail gasoline station operator Petronas Dagangan Bhd. and gas distributor Petronas Gas Bhd., saw revenue rose 29.8 percent from the previous year to $66.2 billion.

But for the first time, the biggest contributor to revenue came from the group's international operations, which generated 40.3 percent of total revenue.

The high oil prices brought windfalls to Petronas and also to the Malaysian government, with Petronas now the single largest contributor to government revenues.

For the 2007 financial year it paid a total of 67.6 billion ringgit ($21 billion) in taxes, dividends, royalties and export duties, up from 52.3 billion ringgit the previous year.

Out of the 67.6 billion ringgit, 62.8 billion ringgit went to the federal government and made up 44 percent of government's total revenue.

The rest went to the state governments.

But despite the company's payments to the government, its huge profits became a political issue after the government decided to raise retail gasoline prices by nearly 41 percent and diesel prices by 63 percent.

Led by the opposition, there have been calls for the government to use Petronas's profits to subsidize fuel prices but Hassan said it would be dangerous for the government to do so.

"Given the volatile nature of the industry, given the fact that we are investing into new development of reserves at high cost, should there be a major downturn in the oil price, then the ability to maintain the high results would be a real challenge and would then have a major impact on government revenue," he warned.

He added that the 67.6 billion ringgit total payment to governments for the year represented 63.1 percent of the group's total profits even as operating costs are rising.

For example, he said, daily charter rates for drilling rigs have recently gone up almost 300 percent and the average price of steel has risen 225 percent.

Oil prices hold above $122 a barrel

By THOMAS HOGUE – 6 hours ago

BANGKOK, Thailand (AP) — Oil held above $122 a barrel Thursday in Asia after dropping more than $2 overnight on worries about declining demand in the U.S. and abroad.

In its weekly inventory report, the U.S. Energy Department's Energy Information Administration said American demand for gasoline dipped 1.4 percent over the last four weeks. Meanwhile, gasoline inventories rose by 2.9 million barrels last week, more than three times the increase analysts polled by energy research firm Platts had expected.

Concerns about demand have helped pull oil down nearly 10 percent from its May 22 high of $135.09. Those concerns were exacerbated Wednesday by the EIA report and by moves by India and Malaysia to cut fuel subsidies, effectively raising their retail prices for everything from gasoline to cooking gas. Many investors believe subsidy cuts will choke off demand for fuel in the developing world.

"There's definitively smaller demand, (and) you have subsidies that are going to fall in energy consuming nations," said James Cordier, president of Tampa, Fla.-based trading firms Liberty Trading Group and OptionSellers.com. "The psychology is just changing."

India announced increases that, for example, would boost gasoline prices in New Delhi by 11 percent. Malaysia said it would hike gasoline prices by 41 percent and electricity for commercial and industrial users by 26 percent.

Indonesia and Taiwan, among others, have taken similar steps in recent weeks.

Midafternoon in Singapore, light, sweet crude for July delivery was up 44 cents at $122.74 barrel in electronic trade on the New York Mercantile Exchange. The contract fell $2.01 in the floor session to settle at $122.30 a barrel.

That was oil's lowest settlement since May 6.

The EIA also said inventories of distillates, which include diesel and heating oil, rose by 2.3 million barrels. Investors shrugged off an unexpected decrease in crude oil inventories.

Many analysts have long questioned whether high oil prices could be sustained; many blame speculative investing fueled by the falling dollar for a near doubling of crude prices over the past year.

A weakening dollar can spur investors to buy oil and other commodities as a hedge against inflation, but the effect tends to reverse when the dollar strengthens. A stronger dollar also makes oil more expensive to buyers dealing in other currencies.

Recently, with some fluctuations, the dollar has been gaining against the euro and yen as U.S. economic data supports the view that the Federal Reserve isn't likely to cut its key interest rate further. In Asian currency trade later afternoon in Tokyo, the dollar was above 106 yen, while the euro was changing hands around $1.54.

Among other main factors cited for sustained high prices over the past year is the unexpected declines in production from some of the world's key exporters, particularly Russia, Venezuela and Mexico.

In other Nymex trading in Asian hours, heating oil futures rose 1.53 cents to $3.5611 a gallon while gasoline prices dropped 0.61 cent to $3.189 a gallon. Natural gas futures rose 1.2 cents to $12.391 per 1,000 cubic feet.

The July natural gas futures rose 15.8 cents to settle at $12.379 on Wednesday, again boosted by forecasts for hot temperatures in parts of the U.S. this weekend. That would boost demand from utilities for electricity generation to cool homes and businesses.

In London, July Brent crude futures rose 52 cents to $122.62 a barrel on the ICE Futures exchange.

AP Business Writer John Wilen in New York contributed to this report.