Petronas says can't meet dividend commitments, needs more austerity

Petroliam Nasional Bhd (Petronas) says it cannot meet dividend commitments due to the low crude oil prices that have strained the national oil company's financial performance.

"I do not expect our cash flow from operations this year to meet our capital expenditure and dividend commitments, this means that we will have to persevere through with more austerity measures and will have to draw on our cash reserves," Petronas President and Group Chief Executive Officer Datuk Wan Zulkiflee Wan Ariffin said today.

For the second quarter ended June 30, 2015, the company posted a pre-tax profit of RM14.61 billion, 47 per cent lower as compared with RM28.06 billion in the same quarter last year, he announced at a press conference here today.

Revenue decreased by 28 per cent to RM61.30 billion from RM85.36 billion, due to lower average realised prices recorded across all products.

However, for this year, Petronas plans to meet the RM26 billion dividend to the government as promised. To date it has paid RM13 billion.

He also said that the declining oil prices and ringgit will not affect the oil giant's on-going projects, which will last for 20-25 years.

"We are in a long-term industry. What happens today will not substantially change our outlook as we are committed to those projects that we have taken on," he said.

Wan Zulkiflee also called on the Malaysian oil and gas industry to join forces for the greater good in this pervasive low oil price environment.

"There are ample opportunities in the market for consolidation, leading ultimately to increased cost efficiency and competitiveness across the industry," he added.