Petronas Q3 pre-tax profit down to RM3.8 billion

National hydrocarbon custodian, Petronas' pre-tax profit for the third quarter (Q3) ended Sept 30, 2015, fell to RM3.8 billion from RM22.7 billion in the same quarter last year.

Revenue for the quarter declined 25 per cent to RN60.06 billion from RM80.37 billion previously due to the continued low oil price condition as global supply continued to outstrip demand, President and Group CEO Datuk Wan Zulkiflee Wan Ariffin said.

"Brent price averaged at US$50 per barrel in the quarter compared to US$101 per barrel in the same quarter last year, and US$62 per barrel in the second quarter of this year," he told reporters at the company's Q3 financial results briefing here Wednesday.

He said as the challenging low oil price environment was anticipated to prolong for a few years, Petronas would continue to focus on internal control measures to steer the company through the downturn.

"Moving forward, with the outlook on the oil and gas sector still uncertain, we must focus on adapting more prudent approaches to our cash management and materialising internal efficiency measures," he added.

Wan Zulkiflee said the low oil price situation was expected to continue for the next few years as the lifting of sanctions on Iran was anticipated to add further supply in the market, as well as the inaction of the Organisation of the Petroleum Exporting Countries (OPEC) to curb oversupply situation.

He said due to the low oil price environment and anticipation of a prolonged situation, Petronas had agreed to pay lower dividend of RM16 billion to the government next year as compared to the RM26 billion being paid for this year.

Nevertheless, he said the company remained committed to its capital expenditure (capex) projects which included the Refinery and Petrochemicals Integrated Development (Rapid) in Pengerang, Pacific North West Integrated liquefied natural gas (LNG) project in Canada, LNG train 9 in Bintulu as well as two floating LNG projects being constructed in South Korea.

"These capex projects are investments for the long-term... we are set on seeing them through successfully to ensure Petronas' sustainability well into the future," he said.

Wan Zulkiflee said the company also has no plan to shed jobs of permanent staff despite seeing the industry cutting over 200,000 workforce globally.

He said Petronas would instead relocate existing manpower across businesses, specifically to the increased downstream activities while remained hopeful that the low oil prices would not prolong to a stage where a measure to cut jobs was required.

Wan Zulkiflee also reiterated his call earlier for Malaysia's oil and gas players to consolidate to overcome the challenging environment and low volume of jobs available in the industry currently.

"I feel that the consolidation among players within the Malaysian oil and gas industry is not happening as quickly as we would like.

"I hope that our colleagues in the industry would heed this call and internalise that the only way out of this storm is to combine forces and become stronger players," he added.

Currently, he said there are over 3,700 oil and gas related companies registered with Petronas.

On the Trans-Pacific Partnership (TPP) trade pact, he said the company was still reviewing the newly-released text of the concluded negotiations before making any adjustments to its operations.

Highlighting the Q3 achievement, Wan Zulkiflee said the company managed to ramp up upstream production by four per cent during the quarter to 2.3 million barrels of oil equivalent per day compared to the same quarter last year, driven by production enhancement or new productions mainly from Malaysia, Vietnam, Indonesia and Azerbaijan.

He said other highlights included Australia's Gladstone LNG project achieving its first production and successfully delivered its first cargo to South Korea in October and the launching of Euro 4M RON 97 fuel in the domestic market in mid-August.

Other operational highlights, he said, were better plant reliability recorded by Melaka Refinery Complex as well as from the petrochemicals segment.

On progress of ongoing projects, he said the Pacific North West Integrated LNG project remained at conditional final investment decision stage, pending the close-out of the final condition to obtain an approval from the Canadian Environmental Assessment Agency.

He said the company was hoping to receive the approval in the next two to three months to start construction works which is expected to be completed by 2021.

As for Pengerang's Rapid project, he said it was on track for phase two of site preparation while the construction of the refinery and cracker was progressing on schedule.

He added that as part of Petronas' ongoing efforts in leading industry-level change initiatives, its Cost Reduction Alliance Initiative (Coral 2.0) had realised actual savings of RM1.5 billion as of September this year.

For the nine-month period, Petronas' pre-tax profit shrank to RM35.45 billion from RM78.04 billion in the same period last year while revenue declined to RM187.55 billion from RM249.78 billion previously.