This article first appeared in The Edge Financial Daily on August 28, 2019

KUALA LUMPUR: Petronas Gas Bhd (PetGas) said yesterday its second-quarter net profit fell 1.26% to RM502.9 million, from RM509.33 million a year earlier, as a result of a higher tax expense.

In a statement on Bursa Malaysia, PetGas said a deferred tax revision reflecting the tax incentive granted for the group’s liquefied natural gas (LNG) regasification terminal in Pengerang, Johor resulted in a lower tax expense a year ago.

Its revenue for the quarter ended June 30, 2019 (2QFY19) conversely rose 1.6% to RM1.38 billion from RM1.36 billion, driven by higher revenue from utilities and gas processing, largely offset by lower revenue from gas transportation and LNG regasification Pengerang under the incentive-based regulation.

“Utilities’ revenue improved on higher demand from customers and an upward fuel gas price revision, while gas processing revenue rose driven by a higher reservation charge under the second-term gas processing agreement,” it said.

“The group’s plants and facilities continued to perform well, above 99% reliability. Gas processing’s liquid plant extraction performance continued to exceed targets, contributing towards higher performance incentives compared with that in the corresponding quarter.

“The utilities segment achieved a favourable sales volume and selling price in line with an upward fuel gas price revision,” PetGas said.

For the first half of FY19, its net profit climbed 2.77% to RM1.02 billion from RM992.55 million a year earlier. Revenue was higher at RM2.75 billion versus RM2.71 billion.

PetGas said the group’s gas processing segment is expected to deliver improved earnings pursuant to the higher fixed reservation charge under the 20-year gas processing agreement’s second term effective from 2019 to 2023.

The group is also mindful of Malaysia’s gas transportation and regasification tariffs’ impact on its revenue.

“As announced on Dec 31, 2018, the Energy Commission had approved the tariffs for gas transportation and regasification services for the pilot regulatory period in 2019.

“While the tariffs are expected to affect the group’s transportation and regasification business segments’ revenues for 2019, both segments are anticipated to continue contributing positively to the group’s earnings,” it said.

In a separate statement, PetGas said it plans to pay a second interim dividend of 16 sen per share — the same as the year before — on Sept 27.