This article first appeared in The Edge Malaysia Weekly on March 11, 2019 - March 17, 2019

PETROLIAM Nasional Bhd (Petronas) expects its capital expenditure this year to be “slightly above RM50 billion” , with a “fair share” allocated for the upstream segment.

This compares with capex of RM46.8 billion last year, up 5.17% compared with FY2017.

In particular, the national oil company expects to spend RM30 billion on upstream activities this year, with around half of it slated for the domestic front.

This follows the near-completion of its US$27 billion Pengerang Integrated Complex, says Petronas president and group executive Tan Sri Wan Zulkiflee Wan Ariffin.

“Essentially, upstream will have its fair share going forward,” he says at a news conference on Petronas’ financial results for the year ended Dec 31, 2018 (FY2018).

“We are also venturing into the new energy space  and that will also take up some of our capex [in 2019].”

He confirms that India is one of the oil company’s areas of exploration in renewables, particularly in the solar energy segment.

“This is an ongoing exercise. There are many opportunities that we have screened, and India is one of them,” says Wan Zulkiflee, in response to a question on whether Petronas is buying into Amplus Energy Solutions Pvt Ltd, one of India’s largest rooftop solar power producers.

It was reported in January that Petronas was in talks with private equity firm I Squared Capital to buy a majority stake in Amplus — which has 350mw of solar power generation capacity — in a deal that could be worth RM1.56 billion.

For the fourth quarter, Petronas saw a 21.34% year-on-year decrease in profit after tax (PAT) to RM14.32 billion, partly due to higher product costs and higher depreciation and amortisation of its upstream assets.

“We took the opportunity to look at our provisioning for our [upstream] decommissioning, dismantlement, removal and restoration [in 4QFY2018],” says Petronas chief financial officer Tengku Muhammad Taufik Tengku Aziz.

This was despite quarterly revenue rising 13.14% y-o-y to RM69.9 billion, mainly due higher average realised prices, which offset lower sales volume for liquefied natural gas.

PAT for FY2018 rose 21.51% y-o-y to RM55.31 billion on the back of higher revenue and supported by net write-back of impairment of assets.

These were partially offset by higher net product and production costs, depreciation and amortisation as well as tax expenses.

Revenue rose 12.23% y-o-y to RM250.98 billion. Of FY2018 revenue, 69% was obtained domestically while the rest came from overseas.

For this year, Petronas has planned its operations with the dated Brent average benchmarked at US$66 per barrel. Brent crude averaged US$71.04 per barrel last year.

Group cash and cash equivalents as at end-FY2018 rose to RM173.58 billion from RM128.21 billion previously. The group is sticking to its dividend payout to the government of RM54 billion, as projected earlier.

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