Petronas forecasts higher 2017 earnings after strong Q3 results

KUALA LUMPUR: Government-owned Petroliam Nasional Bhd, or Petronas, today forecast higher full-year earnings for 2017, after posting a 64% jump in third-quarter profit on improved oil prices.
A higher profit would be the second straight year of improved earnings at Petronas, reversing a two-year profit slump with the help of a modest recovery in oil prices and cost-cutting measures.
“Petronas expects the group’s overall year-end performance to be better than last year,” the company said, indicating an improved view of the energy market since August, when it expected its annual performance to be “fair”.
Petronas president/group CEO Tan Sri Wan Zulkiflee Wan Ariffin said the group remained committed to boosting efficiency across its operations.
“We intend to enhance our efforts to take advantage of the current recovery in oil prices for Petronas to close the year strongly,” he said.
Petronas, like other oil majors, has taken a hit from lower oil prices. Brent crude has fallen sharply since 2014, though it has somewhat recovered this year, trading near a two-year high today.
The firm has focused on cutting costs amid expectations that the low oil price environment will continue. Last year the company said it would cut spending by up to RM50 billion over the next four years.
Petronas is a key contributor to government coffers: its dividends last year accounted for 7.5% of total government revenue. It is one of the country’s largest employers with a workforce of over 50,000.
Petronas said its profit after tax for the quarter ending September, rose to RM10 billion, compared with RM6.1 billion for the same period last year. Revenue totalled RM53.7 billion, up 14% from a year ago.
The revenue increase was due to higher prices for major products and a softer ringgit, but it was partially offset by lower sales volumes of crude oil and condensate, it said.
Total production volume for the quarter fell to 2,206 thousand barrels of oil equivalent (boe) per day, down from 2,227 tboe/day a year ago.
Petronas’ sales volume of liquefied natural gas (LNG) rose by 1% to 7.22 million tonnes in the quarter. The company, the world's third-biggest LNG exporter after Qatar and Australia, has been trying to diversify beyond its traditional LNG markets of Japan and South Korea amid a gas supply glut that has sent prices down sharply.
Petronas scrapped a proposed US$29 billion (RM119 billion) LNG export terminal project in western Canada in July and is now focused on its Refinery and Petrochemical Integrated Development (Rapid) project in Johor. Rapid, in which Saudi Aramco agreed to invest US$7 billion (RM28.7 billion), will contain a 300,000 barrel-per-day oil refinery and a petrochemical complex with a production capacity of 7.7 million tonnes per year. The complex remains on track to achieve ready for start-up status in 2019, Petronas said. – Reuters