Petronas Q4 profit up 45pc

Business Times, March 4, 2014

ONE OF THE BEST YEARS EVER: Stronger production, higher prices and favourable forex rates behind stellar RM12.8b result STRONG production helped Petroliam Nasional Bhd's (Petronas) net profit to soar 45 per cent to RM12.8 billion in the fourth quarter ended December 13 2013, making 2013 "one of the best years ever" for the national oil corporation. Revenue during the quarter improved to RM84.8 billion, compared with RM76.9 billion in the same period in 2012.

For the 2013 fiscal year, it posted a 13 per cent year-on-year net profit jump to RM65.5 billion, on the back of a nine per cent revenue rise to RM317.3 billion. Petronas president and chief executive officer Tan Sri Shamsul Azhar Abbas said last year's performance was due to production rise, one of the key areas that the company has emphasised on in the last couple of years.

"We have been able to do this through our product enhancement initiatives that saw our production capacity rising from 2.01 million barrels of oil equivalent per day (boe/d) in 2012 to 2.13 million boe/d last year. "This year, it will be a challenge for us to achieve that, but we will try," he said after announcing Petronas' fourth quarter and financial year 2013 results, here, yesterday. Shamsul said it was too early to forecast this year's profit figures but added that it may come out with a projection in April or May.

Meanwhile, Petronas executive vice-president of finance, Datuk George Ratilal, said the fourth quarter revenue rise was mainly propelled by rising crude oil and processed gas sales volume, higher realised liquefied natural gas (LNG) prices and favourable US dollar movement against the ringgit. "The increase in crude oil sales volume was driven primarily by higher production in South Sudan and Iraq, while the increase in processed gas was boosted by higher gas supply from the importation of LNG via the regasification terminal in Sungai Udang, Malacca," he said. Ratilal said Petronas' total assets rose to RM528.7 billion as at December 31 2013, compared with RM489.2 billion a year ago.

Gearing ratio dropped to 11.1 per cent as at December 31 2013, compared with 11.7 per cent in 2012 due to higher shareholders' equity, despite a marginal rise in debt level. Despite the challenges, the exploration and production business delivered a strong performance last year, he said. Ratilal said Petronas has made 15 exploration discoveries, of which 10 are local. "We have also achieved 100 active production-sharing contracts in Malaysia, with a 5.8 per cent production growth during the period," he said.

Ratilal said the company has recorded the first production from two of its risk-service contracts - Balai in November and Kapal in December - while also had first production from its Iraq investments - Garraf in August and Majnoon in October. Shamsul said Iran was under Petronas' radar, despite the economic sanctions imposed on the republic. "It (Iran) is still under our radar screen of opportunities. There is no clarity yet on the said sanctions against them," he said.

On whether there would be a change in Petronas' management, Shamsul said it is up to Prime Minister Datuk Seri Najib Razak to either appoint a new successor or extend his contract. "If there is anybody who is capable and able to lead the company, I would oblige to leave. But it's up to the prime minister," he said. Shamsul's contract expires in February next year.

He declined to confirm whether former prime minister Tun Dr Mahathir Mohamad was still Petronas adviser, saying that the matter should be referred to Najib. "It's under the Prime Minister's Office. Petronas is not involved," Shamsul said.