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Another record profit year for Petronas



KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) reported yet another year of record profit as crude oil prices and sales of liquefied natural gas (LNG) continued to rise.

The national oil company recorded a 22.6% increase in net profit at the group level to RM43.6bil for its financial year ended March 31, 2006 as revenue rose 21.8% to RM166.9bil but president and CEO Tan Sri Hassan Marican said spiralling cost, the shortage of human capital and ongoing gas subsidies were concerns.

“Cost to develop and explore has gone up. It has become another challenge, coupled with the shortage of human resources around the world,'' he told the media at the release of Petronas' full-year financial results.

Tan Sri Hassan Marican at the press conference.
Notwithstanding such problems, Petronas enjoyed a bumper financial year as the weighted average price of crude oil sold from all the territories it operated in was markedly higher than in the previous financial year.

Petroleum products, such as refined products, was the biggest contributor to Petronas' revenue last year, bringing in RM55.6bil of the overall revenue of RM166.9bil. This was followed by crude oil, LNG and petrochemical products.

“We are able to achieve these results due to the high reliability of our plants,'' Hassan said.

Pre-tax profit for the year rose 21% to RM70.2bil.

Petronas said 58.4% of group revenue, which had been growing at a compounded annual rate of 26.3% over the past five years, came from manufacturing activities. Its domestic manufacturing revenue constituted 27.8% of the manufacturing sector's contribution to Gross Domestic Product.

Hassan said that percentage would have been much higher if LNG activity was included under manufacturing instead of mining.

Exports accounted for RM73.6bil of total revenue. Total shareholders' funds and liabilities jumped to RM269.2bil from RM239.1bil and the group's gearing ratio dropped to 0.16 times from 0.22 times a year earlier.

Total debt was RM43.9bil with the majority of it in US dollars and payable over the next 10 years. Petronas has RM93.1bil in cash and investments compared with RM75.2bil a year earlier.

A Petronas oil rig
While higher oil prices was the main driver of revenue and profit growth, Hassan said dividends from subsidiary companies amounted to RM15.8bil, which was a 216% increase from the previous financial year. Total investment in such subsidiaries totalled RM64.5bil.

Budgeted capex for its 2007 financial year was RM27.7bil, of which RM19.2bil was for the domestic market. Of the total amount, 48% was for exploration and production and 26.1% was for logistics and maritime, or for subsidiary MISC Bhd.

Total capex in 2006 was RM18.5bil and the majority of that was contributed by production sharing contract partners in Malaysia.

Comparing financial ratios of Petronas with other oil giants, Hassan said its pre-tax profit margin and return on average capital employed were much better than what the other majors were achieving.

He added that the return on total assets at 26% was lower than some of the majors but if property assets were taken out, the ROA would be about 35%.

Petronas also said that as at Jan 1 2006, total reserves in Malaysia amounted to 19.91 billion barrels of oil equivalent, a 2.8% increase from 2005.

Record Profits By EXXON

This morning Exxon, the largest energy company in the world reported record profits of .36 billion for the second three months of the year. This was up from .64 billion from the same period a year ago. You will notice that the earnings were just shy of the record .71 billion they reported in the fourth quarter of last year, 2005. All companies have cushions; the accountants call them reserves. There is always flexibility in the reporting of a company’s earnings. Exxon very easily could have used their flexibility to come in with earnings that were below last year’s fourth quarter record in order to avoid the embarrassment of posting another new record quarter. The company knows that the Congress is looking over Exxon’s shoulder because the American people are looking over the government’s shoulder. This is especially true with Congressional elections, and both houses of Congress up for grabs.

Every President of the United States has paid lip service to American energy independence. It’s like listening to the President’s State of the Union Address. The last seven President within 1 minute of speaking at the State of the Union has always said, “I am please to report tonight that the State of the Union is strong,” with emphasis on the word strong. Each President has proclaimed the need for energy independence, and then has always backed down from doing anything about it.

The answer by the Democrats is to create a tax to confiscate or simply take away what they deem to be excess profits that Exxon, and its associates are making. The Republicans pine away about the need to open up the Southeast coast of Florida to offshore exploration, as though that’s going to bring in millions of barrels per day. The answer is that both parties are wrong. Exxon is simply tacking onto OPEC dictated price the Arab states wish to charge us. It’s more complex than that, but not by much.

Decades ago, the oil world was run by the seven largest oil companies on the planet, most of them American owned. For those of you old enough to remember back in 1973, the Arabs use an embargo against the United States, and all countries supporting Israel. The big oil companies in the United States controlled, and received 60% to as high as 65% of all the revenues generated by the Arab states.

The first cartel was formed back in 1960. From 1960 until 1973, OPEC which is the Organization of Petroleum Exporting Countries had very little power (we mean leverage) over the oil companies. In 1973, that certainly changed. By then the United States was bringing in daily about 35% of energy needs from overseas. Inflation was rampart; commodities in general were rising out of sight, and then all hell broke loose.

The Egyptians and the Syrians attacked Israel on two fronts. The date was Octobers 6, 1973. With the secret support of then President Nixon every weapon short of nuclear was ordered to be flown to Israel to save the Jewish state. Israel was successful in repelling the invasion, but OPEC two weeks later put an embargo against oil shipments to the United States. The Arabs then raised prices for our European allies by 70 plus percent from to more than per barrel. We are now at plus per barrel by comparison with no adjustment for inflation.

In the 1970’s, our economy was much more intertwined with oil, and energy than it is today. We have learned to become more efficient with our machines and processes. Back then, we were propelled into a recession by the dramatic increase in oil prices. Europe went deeper into recession than we did. The lessons haven’t been forgetter, but they haven’t been learned either.

There has been no attempt by the United States for over 30 years to even begin a program of true energy independence. The answer is not to penalize efficiently run Exxon for knowing how to be extremely profitable. Remember the first principle of politics, people vote with their feet.

The Seven Sisters (giant oil companies) who controlled oil prices and policies for generations ceded that power in 1973 to the Arab states. Oil unfortunately is in all the bad neighborhoods of the world, and that’s not going to change. We are at the mercy of Arab pricing for a commodity that is the oxygen of our economy. If Arab oil stops shipping tomorrow, every car and truck, train, and plane would grind to a half shortly thereafter. The United States would have to go to war to maintain our economy and the bad guys know this. They will only push us so far, and no further.

The Arabs want our economy and our Western Europe friends to continue to grow. They want China, and the Pacific Rim to continue to grow. Only through growth can the world afford to pay for Arab oil. They do not want to gouge us, or anger us. It’s not in their interest. They do want to extract the maximum amount we are willing, and able to pay for a barrel of their liquid gold.

One of the consequences of this action is the position that GM finds itself in, and perhaps Ford is in a worse position. GM and Ford are selling cars with obsolete technology, fuel inefficiencies, in a world of Japanese competitors chomping at the bit waiting to assume the title of the largest car company in the world.

Our legacy airline companies are now in the position of have a profit statement that is inversely connected to the price of fuel. Eighteen months ago you could fly a 747 from California to Europe for ,000 in fuel costs. Today the fuel cost is more than 0,000, and getting more expensive.

If the United States wants to achieve energy independence, we must do what France has done. Our electrical generation like France should become nuclear based over the next 15 years. For those who shudder, and cry when they hear the world nuclear, let them know that for more than 50 years the US Navy has had hundreds of vessels run by nuclear power and there has never been a nuclear incident with one of them.

Our cars have to be modeled along European lines. The Europeans have been paying more than per gallons for years and they have learned to deal with it. If GM and Ford can’t handle the problem, the Japanese car companies will handle it for them. After all, the Japanese have been eating Detroit’s lunch for years. Why should it change?

Goodbye and good luck

Richard C. Stoyeck
Value Investing

Richard Stoyeck’s background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and StocksAtBottom.com
Value Investing

Article Source : Featured Articles

DID YOU KNOW ?


Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
The U.S. petroleum industry's price has been heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead have averaged $20.94 per barrel adjusted for inflation to 2004 dollars. In the absence of price controls the U.S. price would have tracked the world price averaging $22.86. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $17.18 in 2004 prices. That means that only fifty percent of the time from 1947 to 2004 have oil prices exceeded $17.18 per barrel. (See note in box on right.)
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $23.00 per barrel in response to war or conflict in the Middle East.

*World Price - The only very long term price series that exists is the U.S. average wellhead or first purchase price of crude. When discussing long-term price behavior this presents a problem since the U.S. imposed price controls on domestic production from late 1973 to January 1981. In order to present a consistent series and also reflect the difference between international prices and U.S. prices we created a world oil price series that was consistent with the U.S. wellhead price adjusting the wellhead price by adding the difference between the refiners acquisition price of imported crude and the refiners average acquisition price of domestic crude.

WHAT THEY SAID?

All you need is belief in yourself to succeed.The moment that your belief disappears, any chance of success goes with it -Andy Carr

The key to successful leadership today is influence, not authority -Kenneth Blanchard

The price of greatness is responsibility -Winston Churchill

DID YOU KNOW ?

A barrel is the quantity constituting a full barrel.This varies fordifferent articles and also in different places for the same article.Thus, in England, the typical barrel for liquids (there is none for solids) holds 36 imperial gallons, though each trade uses its own measure.

In the United States a barrel, liquid measure, is usually 31 1/2 gallons, but a petroleum barrel is 42 gallons.The oil barrel as an actual container for petroleum was largely used in the 1860's. Many of those early barrels had different capacities (less or more than 42 gallons).In the 1870's standardisation at 42 gallons began to take firmer hold and a 42gallon oil barrel became a unit of measure as well as a container.

DID YOU KNOW ?

The modern petroleum industry was born in nineteenth century America. In the early 1800s, entrepreneurs built dams to make oil float to the water surface in an area of western Pennsylvania called Oil Creek. They threw blankets in the water,let them soak up oil, retrieved the oil by wringing out the blankets, and sold the oil for $2 a gallon.

Gasoline was mainly a wasted by-product of the distillation of kerosene from crude oil until demand rose in the early 1900s, when automobiles using gasoline-burning internal combustion engines became commonplace. Farm equipment powered by gasoline and diesel fuel soon became popular as well, dramatically increasing agricultural productivity.

Scientists experimented with further refining petroleum and manipulating the results chemically to produce synthetic compounds called "petrochemicals." Their efforts produced fertilizers and pesticides that increased crop yields, sulphur drugs that conquered infectious diseases, and a new fashion craze: stockings made of nylon instead of silk

DID YOU KNOW ?

  • 90% of the world's offshore structures are in relatively shallow waters
  • The majority of the world's heavy deepwater steel platforms are located in the North Sea.However, the deepest structures are located in the Gulf of Mexico (441 meters) and offshore California (366 meters) compared with the deepest in the North Sea (186 meters)
  • To date some 1,000 structures have been decommissioned in the Gulf of Mexico - 70% in waters less than 30 meters deep and only 3% in waters deeper than 75 meters
  • The heaviest single lift of a fixed steel structure to be removed so far weighed only 7,000 tonnes (the Frøy platform on the Norwegian Continental Shelf in September 2002). The Maureen structure was removed in June 2001 and weighed 110,000 tonnes. This structure was unique as it is the only gravity-based steel structure designed to be refloated. It was moved to an onshore location for deconstruction and partial reuse as no full reuse opportunities were identified
  • The heaviest structures in the North Sea can weigh as much as a million tonnes

DID YOU KNOW ?

Nearly half the world's sea borne trade consists of crude oil or petroleum
products. The largest tankers carry 3 million barrels of crude oil. Products
such as fuel oil, naphtha, jet fuel, and lubricating oils travel in smaller tankers
with separate compartments for different products. The most common way to
move crude oil overland is pumping it through pipelines. Some petroleum
products produced by refineries travel to market by pipeline. The rest go by
truck, rail, or sea. Large users, such as power stations and chemical
manufacturers, receive bulk deliveries directly from refineries. The petrol in
your car may take a more roundabout route to its destination. It goes from the
refinery to a distribution terminal, which may store it briefly before sending it
by truck to the petrol station where you buy it.

DID YOU KNOW ?

Water exists in every oil field and has been voted the most pressing problem for oil & gas companies worldwide.It can be used to perform useful tasks such as maintaining reservoir pressure. Excessive water production and associated problems of scale, corrosion, and separation have a disastrous effect on operations and the environment.In brown fields, in which water cut is approximately 75%, it is a detriment. In a water flood field in which water is used to improve oil recovery, unique placement techniques extend treatment life and reduce the overall cost per barrel of water injected.

Our Company Mission



PETRONAS
Mission

We are a business entity

Petroleum is our core business


Our primary responsibility is to develop
and add value to this national resource


Our objective is to contribute to the
well being of the people and the nation

MY Company Vision

PETRONAS Vision

A Leading Oil and Gas Multinational of Choice

PCSB

CARIGALI : A composite word comprising the malay words " CARI " which means to search and " GALI ", to excavate or mine.

PETRONAS Carigali Sdn Bhd or Carigali, in short, is the wholly-owned exploration and production arm of the national petroleum corporation of Malaysia, PETRONAS. Incorporated on 11 May, 1978, Carigali was formed to augment the exploration and development activities of the foreign oil companies and through its participation, to enhance the pace of development of the upstream sector in the country.

The first overseas venture was established in 1990 and since then Carigali has expanded to 25 countries namely : Vietnam, China, Turkmenistan, Pakistan, Algeria, Angola, Iran, Myanmar, Sudan, Tunisia / Libya and Chad / Cameroon, Morrocco, Mauritania, Benin, Niger, Togo, Equitorial Guinea, Gabon, Egypt, Bahrain, Yemen, Sudan, Mozambique, MTJDA and Indonesia.

Business Activities

PETRONAS' primary business activities can be divided into:

1. International Operations

2. Upstream Activities
Exploration Acreages
Production Sharing Contracts
Sedimentary Basins
Historical Production of Oil & Gas

3. Downstream Activities
Oil Business (Refining activities)
Oil Business (Marketing activities)
Gas Business
Petrochemical Business
Logistics & Maritime Business

PETRONAS profit this year 2006

Petronas net annual profit surges to record US$12.1b

Thursday, June 29th, 2006

KUALA LUMPUR: Malaysia’s national oil and gas company Petronas said Thursday its full-year net profit surged 22.6 percent to a record high, thanks to higher oil prices and increased output. For the year through March, Petroliam Nasional Bhd.’s net profit rose to a record 43.59 billion ringgit (US$12.1 billion; euro9.6 billion), compared with 35.6 billion ringgit a year earlier. Petronas is Malaysia’s most profitable firm and only Fortune 500 company. It is also among Malaysia’s largest bond issuers. Sales for the year rose 21.8 percent to 166.89 billion ringgit (US$46.36 billion; euro36.90 billion) from 137.05 billion ringgit a year ago. Petronas’ total international reserves were steady at 5.94 billion barrels of oil equivalents as at Jan. 1, 2006, from 5.93 billion barrels a year earlier. Asked if Petronas will sell bonds in 2006, Petronas Chief Executive Hassan Marican reiterated it wouldn’t need to sell global bonds this year, as the company has enough cash. - AP

WHAT IS BLACKGOLD?

Petroleum (from Greek petra – rock and elaion – oil or Latin oleum – oil ) or crude oil is a black, dark brown or greenish liquid found in porous rock formations in the earth. The American Petroleum Institute, in its Manual of Petroleum Measurement Standards (MPMS), defines it as "a substance, generally liquid, occurring naturally in the earth and composed mainly of mixtures of chemical compounds of carbon and hydrogen with or without other nonmetallic elements such as sulfur, oxygen, and nitrogen."

Petroleum is found in porous rock formations in the upper strata of some areas of the Earth's crust. It consists of a complex mixture of various hydrocarbons, largely of the alkane series, but may vary much in appearance and composition. Petroleum is used mostly, by volume, for producing fuel oil and petrol (gasoline), both important "primary energy" sources (IEA Key World Energy Statistics). Petroleum is also the raw material for many chemical products, including solvents, fertilizers, pesticides, and plastics. 88% of all petroleum extracted is processed as fuel; the other 12% is converted into other materials such as plastic. Since petroleum is a non-renewable resource, many people are worried about peak oil and eventual depletion in the near future. Due to its continual demand and consequent value, oil has been dubbed black gold.

The combining form of the word petroleum is petro-, as in petrodiesel (petroleum diesel).

FIRST RIG IN MALAYSIA


Miri – from where it all began

MIRI, declared as Malaysia’s newest city today, occupies a very special place in the history of Malaysia’s oil industry – it was here that oil was first struck in 1910.

Possibly the earliest record of the existence of oil seepages in Sarawak’s Baram-Miri District was mentioned in the diary of the Baram district officer in 1882 when he wrote of what he called “the celebrated earth oil”.

Another diary entry in 1884 suggested that “the oil district near the mouth of the Miri River should be thoroughly searched and reported on”.

In 1888, Dr Charles Hose, who became Baram district officer, took his predecessor’s suggestion to heart and began to explore these seepages himself, giving small rewards to locals who kept him closely informed of further discoveries. He soon compiled a map of the area showing no less than 28 oil seepages.

In 1907, retired but still convinced of the feasibility of commercial oil production in Miri, Dr Hose wrote to the then Rajah of Sarawak, Sir Charles Brooke, for permission to show his map and oil samples to the Shell company in London. Permission was granted and Shell was convinced enough to draw up concession negotiations with Brooke.

On terms “which were fair and satisfactory to both parties”, the areas in question were leased for 75 years from 1909 to Shell, then known as the Anglo-Saxon Petroleum Company Limited.

Shell’s chief geologist Dr Josef Theodore Erb visited Miri and carried out a geological survey of greater North Sarawak, which marked Shell’s earliest exploration for oil in Malaysia.

At this time, a number of Shell-owned and affiliated companies were also operating in British North Borneo, now Sabah. But Shell’s initial efforts met with little or no success. Shell then diverted its attention to Sarawak where Dr Erb was making considerable headway in pursuing Dr Hose’s conviction.

Reporting back to London, Dr Erb confirmed the existence of “numerous oil shows”. And in February 1910, after much investigation, the fixed the exploration site on the tip of Miri’s Canada Hill.

His selection of Canada Hill to drill instead of the swamps where the seepages were obviously occurring caused quite a stir among local Miri residents. But it was nevertheless to be indeed an event of profound significance when Malaysia’s first ever oil well was drilled and oil eventually struck on Dec 22,1910.

Called Miri Well No. 1, and now affectionately known as the Grand Old Lady, the wooden derrick erected at 79m above sea level began to produce an initial 83 barrels per day under the laborious cable tool method – a system used by the Chinese as early as 221AD to trap underground salt.

Between 1910 and 1957, 46 more onshore exploration wells were drilled in the Balingian and Baram Delta areas. By the time the last well was drilled in 1972, a total of 624 land wells had been drilled in the Miri field since the 1910 discoveries.

Malaysia’s first oil well is today a state monument and one of Miri’s tourist attractions.

After the discovery of oil in Miri, Shell built Malaysia’s first oil refinery there in 1914. The refinery was relocated to Lutong on the outskirts of Miri in 1916.

The year 1914 was also the year that Shell laid a submarine pipeline in Miri, a breakthrough in the technology of transporting crude to tankers out at sea.

Encouraged by the discovery of the Miri land field, there was no looking back for Shell as it stepped up its exploration activities and covered the entire Sarawak land mass.

The activity was extended to neighbouring Brunei, and – while the results in the rest of Sarawak proved disappointing – major discoveries were made in Seria, Brunei, in 1923.

By the late 1950s, Shell began to take the search for oil off Sarawak and Sabah. In 1960, the first mobile drilling rig ever used in Malaysia, Orient Explorer, arrived in Sarawak waters and began to explore off Baram Point.

Advances in exploration and production technology were used to meet the special challenges of ocean environments. These efforts were rewarded by the discovery of Sarawak’s first offshore field, Baram, in 1963, which coincided with the year the state became part of Malaysia.

Others followed suit – West Lutong, Tukau, Baronia, Betty, Bakau, Bokor, to name a few. The first offshore oil production began from West Lutong in 1968.

Putting its expertise to good use, Sarawak Shell pioneered the single buoy mooring system in 1960. The system, which dispenses with the need for deep-water harbour facilities, was later adapted and used throughout the world.

In 1965, Miri and its people became the first in Malaysia to enjoy all the convenience of piped gas, when Shell started a gas distribution system via the Miri Public Works Department and later through Sarawak Gas Distribution Sdn Bhd.

Petronas took over the operation of the distribution system from Shell in 1988, following which the old pipeline system was replaced and the new pipe length extended from 12km to 40km. Now, there are about 13,500 households and more than 700 commercial and industrial customers.

Meanwhile, off Sabah, oil was found at Erb West in 1971 and at Samarang in 1973. Production started in Samarang in 1975 and Sabah became Malaysia’s second oil-producing state.

More discoveries off the shores of Sabah and Sarawak followed, and the dramatic spectacle of massive oil platforms being towed out to sea became an almost common sight.

Indeed, Miri which sat on oil, grew with it or as a result of it. Oil and later the discoveries of gas fields propelled and fueled the socio-economic development of Miri and its people.

MY COMPANY


About PETRONAS

PETRONAS, short for Petroliam Nasional Bhd, is Malaysia's national petroleum corporation established on 17 August 1974. Wholly-owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources.

Since its incorporation PETRONAS has grown to be an integrated international oil and gas company with business interests in 31 countries. As at end of October 2005, the PETRONAS Group comprised 101wholly-owned subsidiaries, 19 partly-owned outfits and 57 associated companies.

The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.


Address:
Petroliam Nasional Berhad (PETRONAS)
Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia

Another record profit year for Petronas



KUALA LUMPUR: Petroliam Nasional Bhd (Petronas) reported yet another year of record profit as crude oil prices and sales of liquefied natural gas (LNG) continued to rise.

The national oil company recorded a 22.6% increase in net profit at the group level to RM43.6bil for its financial year ended March 31, 2006 as revenue rose 21.8% to RM166.9bil but president and CEO Tan Sri Hassan Marican said spiralling cost, the shortage of human capital and ongoing gas subsidies were concerns.

“Cost to develop and explore has gone up. It has become another challenge, coupled with the shortage of human resources around the world,'' he told the media at the release of Petronas' full-year financial results.

Tan Sri Hassan Marican at the press conference.
Notwithstanding such problems, Petronas enjoyed a bumper financial year as the weighted average price of crude oil sold from all the territories it operated in was markedly higher than in the previous financial year.

Petroleum products, such as refined products, was the biggest contributor to Petronas' revenue last year, bringing in RM55.6bil of the overall revenue of RM166.9bil. This was followed by crude oil, LNG and petrochemical products.

“We are able to achieve these results due to the high reliability of our plants,'' Hassan said.

Pre-tax profit for the year rose 21% to RM70.2bil.

Petronas said 58.4% of group revenue, which had been growing at a compounded annual rate of 26.3% over the past five years, came from manufacturing activities. Its domestic manufacturing revenue constituted 27.8% of the manufacturing sector's contribution to Gross Domestic Product.

Hassan said that percentage would have been much higher if LNG activity was included under manufacturing instead of mining.

Exports accounted for RM73.6bil of total revenue. Total shareholders' funds and liabilities jumped to RM269.2bil from RM239.1bil and the group's gearing ratio dropped to 0.16 times from 0.22 times a year earlier.

Total debt was RM43.9bil with the majority of it in US dollars and payable over the next 10 years. Petronas has RM93.1bil in cash and investments compared with RM75.2bil a year earlier.

A Petronas oil rig
While higher oil prices was the main driver of revenue and profit growth, Hassan said dividends from subsidiary companies amounted to RM15.8bil, which was a 216% increase from the previous financial year. Total investment in such subsidiaries totalled RM64.5bil.

Budgeted capex for its 2007 financial year was RM27.7bil, of which RM19.2bil was for the domestic market. Of the total amount, 48% was for exploration and production and 26.1% was for logistics and maritime, or for subsidiary MISC Bhd.

Total capex in 2006 was RM18.5bil and the majority of that was contributed by production sharing contract partners in Malaysia.

Comparing financial ratios of Petronas with other oil giants, Hassan said its pre-tax profit margin and return on average capital employed were much better than what the other majors were achieving.

He added that the return on total assets at 26% was lower than some of the majors but if property assets were taken out, the ROA would be about 35%.

Petronas also said that as at Jan 1 2006, total reserves in Malaysia amounted to 19.91 billion barrels of oil equivalent, a 2.8% increase from 2005.

Record Profits By EXXON

This morning Exxon, the largest energy company in the world reported record profits of .36 billion for the second three months of the year. This was up from .64 billion from the same period a year ago. You will notice that the earnings were just shy of the record .71 billion they reported in the fourth quarter of last year, 2005. All companies have cushions; the accountants call them reserves. There is always flexibility in the reporting of a company’s earnings. Exxon very easily could have used their flexibility to come in with earnings that were below last year’s fourth quarter record in order to avoid the embarrassment of posting another new record quarter. The company knows that the Congress is looking over Exxon’s shoulder because the American people are looking over the government’s shoulder. This is especially true with Congressional elections, and both houses of Congress up for grabs.

Every President of the United States has paid lip service to American energy independence. It’s like listening to the President’s State of the Union Address. The last seven President within 1 minute of speaking at the State of the Union has always said, “I am please to report tonight that the State of the Union is strong,” with emphasis on the word strong. Each President has proclaimed the need for energy independence, and then has always backed down from doing anything about it.

The answer by the Democrats is to create a tax to confiscate or simply take away what they deem to be excess profits that Exxon, and its associates are making. The Republicans pine away about the need to open up the Southeast coast of Florida to offshore exploration, as though that’s going to bring in millions of barrels per day. The answer is that both parties are wrong. Exxon is simply tacking onto OPEC dictated price the Arab states wish to charge us. It’s more complex than that, but not by much.

Decades ago, the oil world was run by the seven largest oil companies on the planet, most of them American owned. For those of you old enough to remember back in 1973, the Arabs use an embargo against the United States, and all countries supporting Israel. The big oil companies in the United States controlled, and received 60% to as high as 65% of all the revenues generated by the Arab states.

The first cartel was formed back in 1960. From 1960 until 1973, OPEC which is the Organization of Petroleum Exporting Countries had very little power (we mean leverage) over the oil companies. In 1973, that certainly changed. By then the United States was bringing in daily about 35% of energy needs from overseas. Inflation was rampart; commodities in general were rising out of sight, and then all hell broke loose.

The Egyptians and the Syrians attacked Israel on two fronts. The date was Octobers 6, 1973. With the secret support of then President Nixon every weapon short of nuclear was ordered to be flown to Israel to save the Jewish state. Israel was successful in repelling the invasion, but OPEC two weeks later put an embargo against oil shipments to the United States. The Arabs then raised prices for our European allies by 70 plus percent from to more than per barrel. We are now at plus per barrel by comparison with no adjustment for inflation.

In the 1970’s, our economy was much more intertwined with oil, and energy than it is today. We have learned to become more efficient with our machines and processes. Back then, we were propelled into a recession by the dramatic increase in oil prices. Europe went deeper into recession than we did. The lessons haven’t been forgetter, but they haven’t been learned either.

There has been no attempt by the United States for over 30 years to even begin a program of true energy independence. The answer is not to penalize efficiently run Exxon for knowing how to be extremely profitable. Remember the first principle of politics, people vote with their feet.

The Seven Sisters (giant oil companies) who controlled oil prices and policies for generations ceded that power in 1973 to the Arab states. Oil unfortunately is in all the bad neighborhoods of the world, and that’s not going to change. We are at the mercy of Arab pricing for a commodity that is the oxygen of our economy. If Arab oil stops shipping tomorrow, every car and truck, train, and plane would grind to a half shortly thereafter. The United States would have to go to war to maintain our economy and the bad guys know this. They will only push us so far, and no further.

The Arabs want our economy and our Western Europe friends to continue to grow. They want China, and the Pacific Rim to continue to grow. Only through growth can the world afford to pay for Arab oil. They do not want to gouge us, or anger us. It’s not in their interest. They do want to extract the maximum amount we are willing, and able to pay for a barrel of their liquid gold.

One of the consequences of this action is the position that GM finds itself in, and perhaps Ford is in a worse position. GM and Ford are selling cars with obsolete technology, fuel inefficiencies, in a world of Japanese competitors chomping at the bit waiting to assume the title of the largest car company in the world.

Our legacy airline companies are now in the position of have a profit statement that is inversely connected to the price of fuel. Eighteen months ago you could fly a 747 from California to Europe for ,000 in fuel costs. Today the fuel cost is more than 0,000, and getting more expensive.

If the United States wants to achieve energy independence, we must do what France has done. Our electrical generation like France should become nuclear based over the next 15 years. For those who shudder, and cry when they hear the world nuclear, let them know that for more than 50 years the US Navy has had hundreds of vessels run by nuclear power and there has never been a nuclear incident with one of them.

Our cars have to be modeled along European lines. The Europeans have been paying more than per gallons for years and they have learned to deal with it. If GM and Ford can’t handle the problem, the Japanese car companies will handle it for them. After all, the Japanese have been eating Detroit’s lunch for years. Why should it change?

Goodbye and good luck

Richard C. Stoyeck
Value Investing

Richard Stoyeck’s background includes being a limited partner at Bear Stearns, Senior VP at Lehman Brothers, Kuhn Loeb, Arthur Andersen, and KPMG. Educated at Pace University, NYU, and Harvard University, today he runs Rockefeller Capital Partners and StocksAtBottom.com
Value Investing

Article Source : Featured Articles

DID YOU KNOW ?


Crude oil prices behave much as any other commodity with wide price swings in times of shortage or oversupply. The crude oil price cycle may extend over several years responding to changes in demand as well as OPEC and non-OPEC supply.
The U.S. petroleum industry's price has been heavily regulated through production or price controls throughout much of the twentieth century. In the post World War II era U.S. oil prices at the wellhead have averaged $20.94 per barrel adjusted for inflation to 2004 dollars. In the absence of price controls the U.S. price would have tracked the world price averaging $22.86. Over the same post war period the median for the domestic and the adjusted world price of crude oil was $17.18 in 2004 prices. That means that only fifty percent of the time from 1947 to 2004 have oil prices exceeded $17.18 per barrel. (See note in box on right.)
Until the March 28, 2000 adoption of the $22-$28 price band for the OPEC basket of crude, oil prices only exceeded $23.00 per barrel in response to war or conflict in the Middle East.

*World Price - The only very long term price series that exists is the U.S. average wellhead or first purchase price of crude. When discussing long-term price behavior this presents a problem since the U.S. imposed price controls on domestic production from late 1973 to January 1981. In order to present a consistent series and also reflect the difference between international prices and U.S. prices we created a world oil price series that was consistent with the U.S. wellhead price adjusting the wellhead price by adding the difference between the refiners acquisition price of imported crude and the refiners average acquisition price of domestic crude.

WHAT THEY SAID?

All you need is belief in yourself to succeed.The moment that your belief disappears, any chance of success goes with it -Andy Carr

The key to successful leadership today is influence, not authority -Kenneth Blanchard

The price of greatness is responsibility -Winston Churchill

DID YOU KNOW ?

A barrel is the quantity constituting a full barrel.This varies fordifferent articles and also in different places for the same article.Thus, in England, the typical barrel for liquids (there is none for solids) holds 36 imperial gallons, though each trade uses its own measure.

In the United States a barrel, liquid measure, is usually 31 1/2 gallons, but a petroleum barrel is 42 gallons.The oil barrel as an actual container for petroleum was largely used in the 1860's. Many of those early barrels had different capacities (less or more than 42 gallons).In the 1870's standardisation at 42 gallons began to take firmer hold and a 42gallon oil barrel became a unit of measure as well as a container.

DID YOU KNOW ?

The modern petroleum industry was born in nineteenth century America. In the early 1800s, entrepreneurs built dams to make oil float to the water surface in an area of western Pennsylvania called Oil Creek. They threw blankets in the water,let them soak up oil, retrieved the oil by wringing out the blankets, and sold the oil for $2 a gallon.

Gasoline was mainly a wasted by-product of the distillation of kerosene from crude oil until demand rose in the early 1900s, when automobiles using gasoline-burning internal combustion engines became commonplace. Farm equipment powered by gasoline and diesel fuel soon became popular as well, dramatically increasing agricultural productivity.

Scientists experimented with further refining petroleum and manipulating the results chemically to produce synthetic compounds called "petrochemicals." Their efforts produced fertilizers and pesticides that increased crop yields, sulphur drugs that conquered infectious diseases, and a new fashion craze: stockings made of nylon instead of silk

DID YOU KNOW ?

  • 90% of the world's offshore structures are in relatively shallow waters
  • The majority of the world's heavy deepwater steel platforms are located in the North Sea.However, the deepest structures are located in the Gulf of Mexico (441 meters) and offshore California (366 meters) compared with the deepest in the North Sea (186 meters)
  • To date some 1,000 structures have been decommissioned in the Gulf of Mexico - 70% in waters less than 30 meters deep and only 3% in waters deeper than 75 meters
  • The heaviest single lift of a fixed steel structure to be removed so far weighed only 7,000 tonnes (the Frøy platform on the Norwegian Continental Shelf in September 2002). The Maureen structure was removed in June 2001 and weighed 110,000 tonnes. This structure was unique as it is the only gravity-based steel structure designed to be refloated. It was moved to an onshore location for deconstruction and partial reuse as no full reuse opportunities were identified
  • The heaviest structures in the North Sea can weigh as much as a million tonnes

DID YOU KNOW ?

Nearly half the world's sea borne trade consists of crude oil or petroleum
products. The largest tankers carry 3 million barrels of crude oil. Products
such as fuel oil, naphtha, jet fuel, and lubricating oils travel in smaller tankers
with separate compartments for different products. The most common way to
move crude oil overland is pumping it through pipelines. Some petroleum
products produced by refineries travel to market by pipeline. The rest go by
truck, rail, or sea. Large users, such as power stations and chemical
manufacturers, receive bulk deliveries directly from refineries. The petrol in
your car may take a more roundabout route to its destination. It goes from the
refinery to a distribution terminal, which may store it briefly before sending it
by truck to the petrol station where you buy it.

DID YOU KNOW ?

Water exists in every oil field and has been voted the most pressing problem for oil & gas companies worldwide.It can be used to perform useful tasks such as maintaining reservoir pressure. Excessive water production and associated problems of scale, corrosion, and separation have a disastrous effect on operations and the environment.In brown fields, in which water cut is approximately 75%, it is a detriment. In a water flood field in which water is used to improve oil recovery, unique placement techniques extend treatment life and reduce the overall cost per barrel of water injected.

Our Company Mission



PETRONAS
Mission

We are a business entity

Petroleum is our core business


Our primary responsibility is to develop
and add value to this national resource


Our objective is to contribute to the
well being of the people and the nation

PCSB

CARIGALI : A composite word comprising the malay words " CARI " which means to search and " GALI ", to excavate or mine.

PETRONAS Carigali Sdn Bhd or Carigali, in short, is the wholly-owned exploration and production arm of the national petroleum corporation of Malaysia, PETRONAS. Incorporated on 11 May, 1978, Carigali was formed to augment the exploration and development activities of the foreign oil companies and through its participation, to enhance the pace of development of the upstream sector in the country.

The first overseas venture was established in 1990 and since then Carigali has expanded to 25 countries namely : Vietnam, China, Turkmenistan, Pakistan, Algeria, Angola, Iran, Myanmar, Sudan, Tunisia / Libya and Chad / Cameroon, Morrocco, Mauritania, Benin, Niger, Togo, Equitorial Guinea, Gabon, Egypt, Bahrain, Yemen, Sudan, Mozambique, MTJDA and Indonesia.

Business Activities

PETRONAS' primary business activities can be divided into:

1. International Operations

2. Upstream Activities
Exploration Acreages
Production Sharing Contracts
Sedimentary Basins
Historical Production of Oil & Gas

3. Downstream Activities
Oil Business (Refining activities)
Oil Business (Marketing activities)
Gas Business
Petrochemical Business
Logistics & Maritime Business

PETRONAS profit this year 2006

Petronas net annual profit surges to record US$12.1b

Thursday, June 29th, 2006

KUALA LUMPUR: Malaysia’s national oil and gas company Petronas said Thursday its full-year net profit surged 22.6 percent to a record high, thanks to higher oil prices and increased output. For the year through March, Petroliam Nasional Bhd.’s net profit rose to a record 43.59 billion ringgit (US$12.1 billion; euro9.6 billion), compared with 35.6 billion ringgit a year earlier. Petronas is Malaysia’s most profitable firm and only Fortune 500 company. It is also among Malaysia’s largest bond issuers. Sales for the year rose 21.8 percent to 166.89 billion ringgit (US$46.36 billion; euro36.90 billion) from 137.05 billion ringgit a year ago. Petronas’ total international reserves were steady at 5.94 billion barrels of oil equivalents as at Jan. 1, 2006, from 5.93 billion barrels a year earlier. Asked if Petronas will sell bonds in 2006, Petronas Chief Executive Hassan Marican reiterated it wouldn’t need to sell global bonds this year, as the company has enough cash. - AP

WHAT IS BLACKGOLD?

Petroleum (from Greek petra – rock and elaion – oil or Latin oleum – oil ) or crude oil is a black, dark brown or greenish liquid found in porous rock formations in the earth. The American Petroleum Institute, in its Manual of Petroleum Measurement Standards (MPMS), defines it as "a substance, generally liquid, occurring naturally in the earth and composed mainly of mixtures of chemical compounds of carbon and hydrogen with or without other nonmetallic elements such as sulfur, oxygen, and nitrogen."

Petroleum is found in porous rock formations in the upper strata of some areas of the Earth's crust. It consists of a complex mixture of various hydrocarbons, largely of the alkane series, but may vary much in appearance and composition. Petroleum is used mostly, by volume, for producing fuel oil and petrol (gasoline), both important "primary energy" sources (IEA Key World Energy Statistics). Petroleum is also the raw material for many chemical products, including solvents, fertilizers, pesticides, and plastics. 88% of all petroleum extracted is processed as fuel; the other 12% is converted into other materials such as plastic. Since petroleum is a non-renewable resource, many people are worried about peak oil and eventual depletion in the near future. Due to its continual demand and consequent value, oil has been dubbed black gold.

The combining form of the word petroleum is petro-, as in petrodiesel (petroleum diesel).

FIRST RIG IN MALAYSIA


Miri – from where it all began

MIRI, declared as Malaysia’s newest city today, occupies a very special place in the history of Malaysia’s oil industry – it was here that oil was first struck in 1910.

Possibly the earliest record of the existence of oil seepages in Sarawak’s Baram-Miri District was mentioned in the diary of the Baram district officer in 1882 when he wrote of what he called “the celebrated earth oil”.

Another diary entry in 1884 suggested that “the oil district near the mouth of the Miri River should be thoroughly searched and reported on”.

In 1888, Dr Charles Hose, who became Baram district officer, took his predecessor’s suggestion to heart and began to explore these seepages himself, giving small rewards to locals who kept him closely informed of further discoveries. He soon compiled a map of the area showing no less than 28 oil seepages.

In 1907, retired but still convinced of the feasibility of commercial oil production in Miri, Dr Hose wrote to the then Rajah of Sarawak, Sir Charles Brooke, for permission to show his map and oil samples to the Shell company in London. Permission was granted and Shell was convinced enough to draw up concession negotiations with Brooke.

On terms “which were fair and satisfactory to both parties”, the areas in question were leased for 75 years from 1909 to Shell, then known as the Anglo-Saxon Petroleum Company Limited.

Shell’s chief geologist Dr Josef Theodore Erb visited Miri and carried out a geological survey of greater North Sarawak, which marked Shell’s earliest exploration for oil in Malaysia.

At this time, a number of Shell-owned and affiliated companies were also operating in British North Borneo, now Sabah. But Shell’s initial efforts met with little or no success. Shell then diverted its attention to Sarawak where Dr Erb was making considerable headway in pursuing Dr Hose’s conviction.

Reporting back to London, Dr Erb confirmed the existence of “numerous oil shows”. And in February 1910, after much investigation, the fixed the exploration site on the tip of Miri’s Canada Hill.

His selection of Canada Hill to drill instead of the swamps where the seepages were obviously occurring caused quite a stir among local Miri residents. But it was nevertheless to be indeed an event of profound significance when Malaysia’s first ever oil well was drilled and oil eventually struck on Dec 22,1910.

Called Miri Well No. 1, and now affectionately known as the Grand Old Lady, the wooden derrick erected at 79m above sea level began to produce an initial 83 barrels per day under the laborious cable tool method – a system used by the Chinese as early as 221AD to trap underground salt.

Between 1910 and 1957, 46 more onshore exploration wells were drilled in the Balingian and Baram Delta areas. By the time the last well was drilled in 1972, a total of 624 land wells had been drilled in the Miri field since the 1910 discoveries.

Malaysia’s first oil well is today a state monument and one of Miri’s tourist attractions.

After the discovery of oil in Miri, Shell built Malaysia’s first oil refinery there in 1914. The refinery was relocated to Lutong on the outskirts of Miri in 1916.

The year 1914 was also the year that Shell laid a submarine pipeline in Miri, a breakthrough in the technology of transporting crude to tankers out at sea.

Encouraged by the discovery of the Miri land field, there was no looking back for Shell as it stepped up its exploration activities and covered the entire Sarawak land mass.

The activity was extended to neighbouring Brunei, and – while the results in the rest of Sarawak proved disappointing – major discoveries were made in Seria, Brunei, in 1923.

By the late 1950s, Shell began to take the search for oil off Sarawak and Sabah. In 1960, the first mobile drilling rig ever used in Malaysia, Orient Explorer, arrived in Sarawak waters and began to explore off Baram Point.

Advances in exploration and production technology were used to meet the special challenges of ocean environments. These efforts were rewarded by the discovery of Sarawak’s first offshore field, Baram, in 1963, which coincided with the year the state became part of Malaysia.

Others followed suit – West Lutong, Tukau, Baronia, Betty, Bakau, Bokor, to name a few. The first offshore oil production began from West Lutong in 1968.

Putting its expertise to good use, Sarawak Shell pioneered the single buoy mooring system in 1960. The system, which dispenses with the need for deep-water harbour facilities, was later adapted and used throughout the world.

In 1965, Miri and its people became the first in Malaysia to enjoy all the convenience of piped gas, when Shell started a gas distribution system via the Miri Public Works Department and later through Sarawak Gas Distribution Sdn Bhd.

Petronas took over the operation of the distribution system from Shell in 1988, following which the old pipeline system was replaced and the new pipe length extended from 12km to 40km. Now, there are about 13,500 households and more than 700 commercial and industrial customers.

Meanwhile, off Sabah, oil was found at Erb West in 1971 and at Samarang in 1973. Production started in Samarang in 1975 and Sabah became Malaysia’s second oil-producing state.

More discoveries off the shores of Sabah and Sarawak followed, and the dramatic spectacle of massive oil platforms being towed out to sea became an almost common sight.

Indeed, Miri which sat on oil, grew with it or as a result of it. Oil and later the discoveries of gas fields propelled and fueled the socio-economic development of Miri and its people.

MY COMPANY


About PETRONAS

PETRONAS, short for Petroliam Nasional Bhd, is Malaysia's national petroleum corporation established on 17 August 1974. Wholly-owned by the Government, the corporation is vested with the entire oil and gas resources in Malaysia and is entrusted with the responsibility of developing and adding value to these resources.

Since its incorporation PETRONAS has grown to be an integrated international oil and gas company with business interests in 31 countries. As at end of October 2005, the PETRONAS Group comprised 101wholly-owned subsidiaries, 19 partly-owned outfits and 57 associated companies.

The Group is engaged in a wide spectrum of petroleum activities, including upstream exploration and production of oil and gas to downstream oil refining; marketing and distribution of petroleum products; trading; gas processing and liquefaction; gas transmission pipeline network operations; marketing of liquefied natural gas; petrochemical manufacturing and marketing; shipping; automotive engineering; and property investment.


Address:
Petroliam Nasional Berhad (PETRONAS)
Tower 1, PETRONAS Twin Towers
Kuala Lumpur City Centre
50088 Kuala Lumpur
Malaysia