Petronas net profit drops 45% to RM8.7b

By Tanu Pandey
KUALA LUMPUR: Marred by higher operating costs and impairment losses on plants and equipment, Petroliam Nasional Bhd’s (Petronas) net profit for the last quarter ended Dec 31, 2012, tanked at 45% to RM8.7 billion year-on-year.

The state-owned oil company is now prepared to focus on domestic production after having expanded its oil production and exploration presence globally for many years.
For the entire 2012 fiscal year, it posted a 14% dip in net profit to RM59 billion compared with RM68.6 billion in 2011, Petronas announced in its financial report yesterday.

“The global oil industry has been affected and Petronas certainly has also been affected,” Petronas’ president and CEO Shamsul Azhar Abbas told reporters when announcing the results yesterday.
Petronas and its partners were forced by the South Sudan government to shut down oil production at Thar Jath field in Unity state amid a dispute with its northern neighbour Sudan over transportation fees for its exports. The loss due to this was about 120,000 barrels of oil equivalent per day production.


“The production has stopped since the second-quarter (2Q) of last year,” Shamsul Azhar said.
The revenue for the company slipped marginally to RM76.77 billion in the last quarter compared to RM78.05 billion in the 2Q of 2011.

Petronas produced 2.01 million barrels of oil equivalent per day in 2012 compared with 2.07 million per day in 2011, the company said. The overall resources replenishment ratio for last year was two times, excluding the progress in Canada.

As part of its efforts to secure more overseas reserves to stay profitable and offset falling domestic output, it recently completed a C$5.2 billion (RM15.66 billion) takeover of Canada’s Progress Energy Resources Corp.

“We hope production will increase from the domestic discoveries we made recently… and the production from the three fields in Iraq we started will come on board by the 4Q,” Shamsul said. Petronas will pay a dividend of RM27 billion this year to the Malaysian government, it said.
The company and the government have been at loggerheads as Petronas wants to link its government payments to profit rather than pay its current flat fee and to use more of its income for investment in production.

On this, Shamsul Azhar said: “With regard to the dividend policy, we are in the process of going to the board [company’s board of directors] to discuss it.”
Meanwhile, with regard to the offer made by Petronas to take over Malaysia International Shipping Corp Bhd (MISC) for RM5.30 per share, the company said that it has made an offer based on its perception.

“The independent advisors have been appointed. They will come out with their assessment today,” Shamsul said.

Petronas owns 63% of the liquified natural gas shipping company shares, while Employees Provident Fund (EPF) holds 9.6%.
After the offer price of RM5.30 per share, EPF, MISC’s biggest minority shareholder, said that the offer was below expectation whi le Penang Development Corp and Pacific Mut ua l Fu nd Bhd said the offer undervalues the company.
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