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Petronas ups govt dividend to RM40bil despite lower oil prices

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National oil corporation will increase its dividend payout by an extra RM5 billion from the RM35 billion previously announced.

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Free Malaysia Today
Petronas says it will be able to honour its dividend commitment to the government without impinging on its operational integrity. (Reuters pic)

PETALING JAYA:
Petroliam Nasional Bhd (Petronas) is set to boost the government’s coffers by distributing an additional RM5 billion in dividend, bringing the total payout to RM40 billion for FY2023 despite lower crude oil prices.

The national oil corporation will be able to honour its commitment to the government without impinging on its operational integrity as it continues its operations, said executive vice-president and group chief financial officer Liza Mustapha.

“It is a longer-term projection in discussions we have with our shareholders. We take the long view (in our) discussions, not just for the next 12 months but let’s say, further to 2030,” she said during a briefing on Petronas’s first half (H1 FY2023) financial results today.

On whether what it spends on new businesses will affect the dividend payout, she said: “We orchestrate a top-down (approach) in capital allocation.

“We will put aside 20% of our capital expenditure (capex) on an average basis for new business and investment to source new energy,” she explained.

President and group CEO Tengku Muhammad Taufik Aziz previously said in June that the approved dividend for FY2023 to the government was RM35 billion.

Petronas’s Q2 profit decline

Petronas saw a 29% decline in profit after tax (PAT) for the second quarter ended June 30 (Q2 FY2023), with earnings falling to RM16.4 billion from RM23 billion in the same period last year.

This drop was attributed to reduced average realised prices across all products due to a 26% year-on-year (y-o-y) decrease in crude oil prices.

It reported a 13% contraction in quarterly revenue to RM79.9 billion from RM92.3 billion a year ago, due to diminished average realised prices across all product lines.

However, this decrease was partly mitigated by increased sales volume in petroleum and petrochemical products, along with a positive foreign exchange influence.

Liza said the group’s performance aligned with other significant players in the oil and gas (O&G) industry which have witnessed diminished profits over the past few quarters compared to the “exceptional year of 2022”.

This reflected the trend of crude oil prices returning to more standard levels, she added.

Petronas’s upstream and gas divisions experienced a decrease in y-o-y revenue contributions, partially balanced by increased contributions from its downstream, corporate, and other segments.

For the six months ended June 30 (H1 FY2023), the group recorded a 13% decline in its PAT, falling to RM40.2 billion from RM46.4 billion the previous year, with revenue remaining relatively stable at RM170.3 billion, just below the RM170.4 billion reported previously.

The upstream division experienced a 20% decline in revenue to RM33.4 billion from RM41.92 billion due to reduced average realised prices and sales volume for crude oil, condensates, and natural gas.

On the other hand, the downstream sector witnessed a slight 3% increase in revenue to RM44.73 billion from RM43.62 billion, supported by greater sales volume and favourable foreign exchange rates.

Economic headwinds and energy security concerns

Tengku Muhammad Taufik said oil and gas prices remain volatile, influenced by persistent economic headwinds and energy security concerns.

He noted that oil prices will remain in the range of US$70 to US$80 per barrel (/bbl), influenced by the Organization of the Petroleum Exporting Countries’ (Opec) actions to mitigate market fluctuations.

“We have upheld the view that we will always be guided by fundamentals, but even today reading fundamentals has proven to be extremely clouded by noise,” he said.

“If I speak to our trading counterparts, we will have planning scenarios where you will see a range of Brent at US$70-80/bbl, so we need to make sure in the near term that our projects remain robust not only over the near term but also over the long term,” he added.

Nonetheless, his outlook for gas was upbeat, as he noted it to be the singular fuel experiencing demand expansion despite temporary disturbances and updates from specific markets.

“There is always that structural need as people switch away from coal, so the demand for gas steps up,” he said.

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