UOB Kay Hian Research analyst Kong Ho Meng said while there have not been any large tenders awarded by Petroliam Nasional Bhd (Petronas), it expected contracts to be rolled out from next year. In Malaysia, he said, about 11% or about 35 of the over 300 platforms have been operating for over 40 years, and more than 200 wells have already been identified to be plugged and abandoned.
KUALA LUMPUR (Reuters): Petronas said on Friday its fourth-quarter profit slid 21% as costs piled up, and warned it will have to chart a way through a volatile, challenging 2019 citing market uncertainties and geopolitical risks.
Petronas, Malaysia’s only Fortune 500 company, said October-December profit slipped to RM14.3bil from RM18.2bil in the same period a year earlier, hit by higher product costs, depreciation and amortisation of assets.
The drop came despite a 13% jump in quarterly revenue to RM69.9bil, helped by higher prices for its key products.
“The oil price is expected to remain volatile in 2019,” said chief executive Wan Zulkiflee Wan Ariffin, speaking at an earnings briefing.
“The board expects the financial performance for 2019 to be affected by the movements in prices.”
The company, the sole manager of Malaysia’s oil and gas reserves, said it’s budgeting for an average oil price of US$66 per barrel in 2019. Brent crude oil futures were last down 0.8% at $65 per barrel.
While it navigates oil price uncertainty, Petronas said it plans little change in capital expenditure. This year it will slightly more than RM50bil, it said, up from less than RM50bil in 2018.
Since Petronas’ joint venture refinery project with Saudi Aramco in southern peninsular Malaysia commenced its start-up process in January, and is expected to be ready for commercial operations by the fourth quarter of this year, the company said it will have opportunities to invest in other areas.
About RM30bil will go to its upstream business, Petronas said, while the firm will continue to review opportunities outside its traditional business including solar energy.
“We’re exploring, reviewing and assessing opportunities specifically on renewables and specialty chemicals,” Wan Zulkiflee said, without
identifying acquisition targets.
“There are many opportunities that we are pursuing and India is one of them.”
Petronas was previously reported to be in talks to buy a majority stake in an Indian rooftop solar power producer.
Meanwhile the firm, a key contributor to state coffers, will pay RM54bil in total annual dividends to the Malaysian government, its sole shareholder - more than double the RM26bil it paid out a year earlier.
An expanded national budget unveiled last November had said the Malaysian government would receive a one-off dividend of RM30bil in 2019.
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